Annual Report 1995/96, Page 2

РОССИЙСКАЯ ЭКОНОМИЧЕСКАЯ ШКОЛА

N E W E C O N O M I C S C H O O L

Annual Report

1995/96

Российская Федерация,117418 Москва, Нахимовский проспект 47. Suite 1721, Nakhimovskii Prospekt 47., 117418 Moscow, Russian Federation. tel(7)(095) 129-3844 or 129-3722 # fax(7)(095)129-3722 E-mail [email protected]

TABLE OF CONTENTS

INTRODUCTION 4

ACADEMIC PROGRAM 6

COURSE OFFERINGS AND DETAILS: ACADEMIC YEAR 95/96 6 STATISTICAL REPORT ON COURSES 14 PUBLIC SEMINAR 17 CONFERENCES 18

STAFF AND FACULTY DEVELOPMENT 19

INSTITUTIONAL AND CURRICULUM DEVELOPMENT TRAINING 19 FINANCIAL DEVELOPMENT TRAINING 19 LIBRARY TRAINING 19 FACULTY DEVELOPMENT 20

RESEARCH AT NES 21

RESEARCH CENTER 21 STUDENT RESEARCH 24

COOPERATION WITH OTHER INSTITUTIONS 26

DONETSK STATE UNIVERSITY 26 INTERNATIONAL COLLEGE, MOSCOW STATE UNIVERSITY 26 HIGHER SCHOOL OF ECONOMICS (HES) 26 SUMMER SCHOOLS 26

THE STUDENTS 28

CURRENT STUDENTS: PROFILE 28 GRADUATES FOR THE ACADEMIC YEAR 1995/6 31 EMPLOYMENT AND/OR ACADEMIC PLACEMENT OF ALUMNI 31 ACADEMIC PLACEMENT OF GRADUATES: CLASS OF 96 34 ACADEMIC PLACEMENTS FOR ALL GRADUATES 36 ADMISSIONS CLASS OF 1998: STATISTICAL REPORT 37 FORMATION OF ALUMNI ASSOCIATION 37

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FACILITIES 38

COMPUTER RESOURCES 38 THE DON PATINKIN MEMORIAL LIBRARY 38 OTHER 40

GOVERNANCE 41

THE INTERNATIONAL ADVISORY BOARD (IAB) 41 THE RECTORATE 42 ACADEMIC COMMITTEE 42 ADMISSIONS COMMITTEE 43 FINANCIAL COMMITTEES 43 GOVERNANCE OF THE RESEARCH CENTER 43

FINANCES 44

MAJOR FUNDERS: SOROS, EURASIA AND FORD FOUNDATIONS 44 RUSSIAN FINANCING SOURCES 44 FORMATION OF FRIENDS OF NES 44

PUBLICATIONS AND INFORMATION DISSEMINATION 45

PROSPECTUS 45 USE OF INTERNET 45 OTHER PUBLICATIONS 45

APPENDIX A: CONFERENCE SCHEDULES 46

APPENDIX B: ABSTRACTS OF STUDENTS’ THESES 49

APPENDIX C: NES DIRECTORY 57

CONTACT LIST 57

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INTRODUCTION

This annual report marks the end of the fourth year of operation of the New Economic School, Moscow. The School is now fully established with a growing reputation both regionally and internationally. Its curriculum has become more finely honed to meet the twin needs of the environment in which it operates and the standards of the best international institutions in the field of economics. Administratively, the School now functions with a smoothness arrived at by the hard work by a dedicated administrative staff. The year has seen a further indicator of the School’s growing maturity through the establishment of an Alumni association.

The highlight of the year was the establishment of NES Research Center where students, visiting scholars and NES faculty can work together on research projects related to the economic transition. The initial core program of the Center is the study of the problems of Transforming Government in Economies in Transition (GET). This Center exists through the generosity of the Ford Foundation which is funding its establishment and first three years of operation.

Despite these achievements, financial uncertainty still dogs the School’s best efforts and considerable energy is diverted from the main task into seeking ways and means to establish more stable and long term financial support. To date the School has been chiefly funded by Soros Foundations, Eurasia Foundation and more recently a grant from the Ford Foundation to enable the setting up of a Research Center. The School enjoys both academic and intellectual support from the Russian Government, but with so many demands on its limited financial resources it has only been able to provide very minor financial support, along with generously providing accommodation at the Central Economics and Mathematical Institute of the Russian Academy of Sciences (CEMI).

The time has come for NES to look forward to a second stage of development which includes a long term and secure financial base. To this end, a Strategic and Financial Plan has been drawn up. The plan spells out a strategic program for the second stage of the development of NES during the next five years, 1997 to 2002. Its main guiding and organizing concept is the transformation of NES into a first rate indigenous Russian graduate School of teaching and research in Economics, fully integrated into the global economics community and the center for the dissemination of modern economics into other universities of the region, and into the public and private sectors. The plan sees the main carriers of this mission to be the graduates of NES, with Master and Ph.D degrees, the latter coming back to Russia from studies in some of the best economics departments in the West. For funding it still looks to its staunch supporters, The Soros Foundations, Eurasia and Ford Foundations. However, it will be increasing the effort to seek financial help from new supporters from Russia, Eastern Europe and the West.

NES’s strategic goals are therefore:

1. To develop NES as a first rate Russian graduate school of economics pursuing high level teaching and research as part of the international economic community 2. To place qualified graduates of the School in teaching positions in other universities in Moscow and Russia and to serve as an ongoing academic and research support for them 3. To help place the school graduates (both with Masters and Ph.D qualifications) as professional economists in the public and private sectors of Russia, to offer them opportunities to continue to work on research projects at NES, and to serve as their follow-up academic guide and base 4. To develop NES into a main support, dissemination and outreach base for economics. In addition to the academic and research support for its graduates, NES will also provide training and research support to all other economists, whether teachers in other universities or professional economists.

This strategy calls for action in a number of directions and a number of supporting activities:

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• Creating a Russian faculty at NES • Developing the Research Center for NES faculty and other graduates of NES • Creating first class academic and research facilities: a capital investment program • Establishing a placement, dissemination and outreach center in Moscow. This may be a division or a partner of the Alumnae Association of NES responsible, among others, for keeping in touch with all NES graduates in Russia and Abroad. The center will also be responsible for fundraising in Russia • Establishing small fundraising operations in the US and in Europe

This report outlines in considerable detail the work and achievements of NES during the academic year 1995/96. It aims to draw your attention to the quality of the program offered; the calibre of the faculty (both visiting and local); the seriousness and importance of the research undertaken; the quality of its students; and the remarkable record of the ready placement of our graduates in some of the best economics departments in the world.

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ACADEMIC PROGRAM 1 During this academic year, development and refinement of the curriculum has continued. In particular, several important improvements were made to the Second Year program. In order to expose students early to the processes and skills required in academic writing and also to assist them in refining their final thesis topics, a course paper requirement was introduced this year. A further improvement was the introduction of a refereeing process for Masters theses. The theses were assessed by advisors and outside readers with the Thesis Committee awarding final grades of Distinction, Excellent, Pass or Fail. This year, three theses were awarded Distinction and four Excellent. (See Research at NES below for details of thesis topics and awards. See also Appendix B for abstracts)

This academic year also saw an increase in the number of electives offered. These included courses in Economics of Natural Resources, Time Series and Finance.

Course Offerings and Details: Academic Year 95/96 Pre-Academic Year: August 21 - September 8 Preparation: Intensive English

Period 1: September 11- October 29, 1995 (Exams: October 28-Nov. 3)

First Year Courses 1. Intermediate Microeconomics I Daniel Kahn, Georgetown U (Main textbook: Microeconomic Theory, W. Nicholson, Sixth Edition) This course begins with an introduction to the basic concepts and models of analysis in microeconomics. The course then develops the theory of the consumer including rational consumer behavior, consumer demand, market demand, equilibrium of pure exchange economies, and choice under uncertainty.

2. Intermediate Macroeconomics I Avner Bar-Ilan, U of Haifa (Main textbook: Macroeconomics in the Global Economy, J. Sachs and F. Larrain, 1993) This course is a study in the functioning of the national economy. The basic goal of the course is to understand the behavior of certain aggregate markets, the markets for goods and labor in particular, and how and why some key economic variables, like unemployment and inflation, change. The role of government is studied as well.

3. Probability and Statistics I Sergei Aivazian, CEMI This course is designed to introduce students to the statistical tools essential for other courses such as Econometrics and Applied Multivariate Statistical Analysis. The course starts with the basic notions of probability theory: probability space, random variables and models of probability distribution laws. Next, the main results of probability theory are discussed: probability distribution law of random variables which are functions of known random variables; Tchebychev's inequality; statistical stability of sampling characteristics; the normal distribution and the central limit theorem. The course goes on to consider Markov chains, the basics of statistical description and statistical estimation of parameters. The final topics are the statistical testing of hypotheses and elements of regression and variance analysis.

4. Mathematics I (Basic) Aleksandr Shananin, CEMI This course introduces students to the mathematical methods widely used in economics and quantitative social sciences. The topics covered include: 1) Introduction to Topology; 2) Mathematical programming; 3) Lagrange's method; 4) Convex sets and Convex functions; 5) Convex programming, Kuhn-Tucker theorem; 5) Envelope theorem; 5) Quasi-concave programming; 6) Linear programming; 7) Duality; 8) Discrete programming.

5. Mathematics I (Adv) Viktor Polterovich (coordinator), NES & CEMI

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This is an elective course designed for students with former mathematical education the purpose of which is to introduce students to mathematical tools and models that are extensively used in modern economic theory. The topics covered are: 1) elements of convex analysis and optimization theory; 2) selected topics in mathematical programming; 3) fixed point theorems; 4) elements of qualitative theory of ordinary differential equations; 5) elements of differential topology.

Second Year Courses: 1. Advanced Microeconomics III Chaim Fershtman, Tel Aviv U (Main textbook: Microeconomic Theory, A. Mas-Colell, M. Whinston & J. Green) Topics: General equilibrium analysis, pure exchange, equilibrium and the basic welfare theorems, existence, uniqueness, stability, the core and equilibrium, elements of welfare economics and axiomatic bargaining

2. Industrial Organization I Chaim Fershtman, Tel Aviv U This course covers the following topics: monopoly pricing and product selection, oligopolistic markets (static and dynamic competition and cartel behavior), strategic behavior affecting market structure (entry deterrence, exit, predation), product differentiation and monopolistic competition (production selection in competition, consumer search, network externalities)

3. Topics in International Economics Andrew Warner, HIID The main purpose of the course is to introduce current research on major topics in international economics, with particular attention to topics that are important for Russia. These topics will include: global integration and economic reform around the world, exchange rate determination and financial crises, the international debt crisis, and macroeconomic models for an open economy.

4. The Structure of Production & Productivity Analysis Moshe Kim, U of Haifa This course will study the methodology involved in analyzing the structure of production and productivity concepts and measurement. The course will concentrate on both the theoretical foundations of the concepts and the empirical application to various sectors of the economy.

5. The Theory of Risk and Economic Mechanisms of Stabilization 1 Vladimir Rotar, CEMI The course addresses the following topics: basic definitions and types of risk; measurements of risk and risk aversion; models of insurance including risk premia, reserve requirements, reinsurance.

6. Banking Moshe Kim, U of Haifa The purpose of this course is to present and discuss issues related to the banking sector. In particular it is intended to uncover issues which will help the understanding of the working of banks and banking markets with their specific characteristics. Particular attention is directed toward the formation and estimation of econometric models of oligopolistic banking markets and the interpretation of results and their application to policy formation concerning competitive viability, efficiency, and government intervention.

7. International Economics I Avner Bar-Ilan, U of Haifa This course is a study of the real part of international transactions. The first part of the course is international trade theory. This is an attempt to understand why international trade exists, its patterns and possible gains from trade. Both classic and modern theories are presented and discussed. The second part of the course will be devoted to applying the theory to policy issues. These include tariffs, quotas, industrialization, and free trade.

8. History of Economic Thought I Revold Entov, IMEMO, Moscow Topics include Economic thought in antiquity and the middle ages; The rise of mercantilism; Land as the principle source of economic wealth; The formation of the Classical School (Smith and Ricardo); Malthus; Mill; Alternatives to the Classical School, e.g. the socialists and Marxists.

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Period 2: November 6 - December 24, 1995 (Exams: Dec. 23 -29) First Year Courses 1. Intermediate Microeconomics II Alla Friedman, NES (Main textbook: Microeconomic Theory, W. Nicholson, Sixth Edition) Topics: the theory of the firm, partial equilibrium analysis, theories of monopolistic and oligopolistic markets

2. Intermediate Macroeconomics II Brigette Granville, RIIS (Main textbook: Macroeconomics in the Global Economy, J. Sachs and F. Larrain, 1993) This is the second part of the three part intermediate macro sequence. IS-LM analysis Aggregate Supply and Aggregate Demand; The Government Sector; Money Demand, Money Supply.

3. Probability and Statistics II Sergei Aivazian, CEMI (Continued - see description in Period 1)

4. Mathematics II (Basic) Aleksandr Shananin, CEMI (Continued - see description in Period 1)

5. Mathematics II (Advanced) Viktor Polterovich (coordinator), NES & CEM (Continued - see description in Period 1)

Second Year Courses: 1. Industrial Organization II Michael Baye, Penn State This course focuses primarily on oligopolistic rivalry. The first half of the course will survey some of the theoretical and empirical work. The second half analyzes research areas that have been made the focus of recent theoretical work in Industrial Organization including auction, R&D races, search/matching models, as well as equilibrium in games where payoff functions are discontinuous or non-quasiconcave.

2. Public Economics Rohan Pitchford, Australian National University The course covers social choice theory including a framework for analyzing social choice problems, social welfare functions and compensation criteria, and Arrow's Impossibility Theorem and voting. This is followed by a development of the theory of externalities and their solutions including taxation and public provision, the assignment of property rights, and private provision. Finally, the course examines informational externalities, examining their relationship to traditional externalities, the public goods informational free rider problem and Groves mechanism and an introduction to implementation theory and mechanism design (the revelation principle, dominant strategy and Nash implementation).

3. Contract Theory Rohan Pitchford, Australian National University The course begins with a review of decision making under uncertainty. The second part of the course examines static models of moral hazard including the basic principal agent model with moral hazard, the model with many agents, and some applications and variants. The third part of the course analyzes models of asymmetric information covering Bayesian equilibrium, mechanism design and the revelation principle, the principle agent model with adverse selection, and the model with many agents. Finally, the course looks at incomplete contracts including reasons for contract incompleteness, theories of ownership, and verifiability and incompleteness.

4. Economics of Transition: Property Rights and Economic Theory Daniel Kahn, Georgetown University This course addresses general equilibrium approaches to modeling the role of the stock market in allocating resources in an economy. In particular, the course analyzes different formulations of the objective value of firm managers based on considerations of the ownership structure of firms. The implications of the private ownership assumption of neo-classical economics are explored. Finally, questions of financial innovation (asset creation), firm formation, and privatization are discussed.

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5. History of Economic Thought II Revold Entov, IMEMO, Moscow The German Historical and Austrian Schools; Marginalism; development of partial and general equilibrium analysis (Marshall, Walras, Edgeowth, Pareto, and Slutsky); American institutionalism (Coase); the Stockholm School; perfect and imperfect competition (Robinson, Chamberlain); the Keynesian revolution; monetarism; the neo-classical school

6. The Economics of Natural Resources I Oleg Eismont, Moscow This course begins with a general description and definitions of natural resources as a factor of production as well as means of valuing these resources. The course then focuses on land resources and land rents; natural resources as public goods; exhaustible and non-exhaustible resources.

7. The Theory of Risk and Economic Mechanisms of Stabilization II Vladimir Rotar, CEMI Exchange and investment under uncertainty; dynamic models of growth under uncertainty.

8. Research Workshop I Michael Baye, Penn State The purpose of the research workshops is to help students develop topics for their master's thesis and to give them the opportunity to present their work in progress. In addition, the workshops give students experience in making presentations. The workshops also stress the technical aspects of research including proper uses of references, the writing of abstracts and literature surveys, the organization of a paper, and so on.

Period 3: January 15 - March 3, 1996 (Exams: March 2 -8) First Year Courses 1. Intermediate Microeconomics III Daniel Kahn, Georgetown U (Main textbook: Microeconomic Theory, W. Nicholson, Sixth Edition) Topics: markets for capital and labor; general equilibrium with production, definitions, existence, and efficiency; the role of information in general equilibrium, externalities and public goods.

2. Advanced Macroeconomics I Viktor Polterovich, CEMI & NES (Main textbook: Lectures on Macroeconomics, O. Blanchard and S. Fisher) Topics: Ramsey model; overlapping generations models; money in market clearing models

3. Econometrics I Pavel Katyshev & Anatoly Peresetski, NES & CEMI (Main textbook: Econometric Models and Economic Forecasts, third edition, R. Pindyck & D. Rubinfeld) The two-variable model; Ordinary least squares estimators, the Gauss-Markov theorem; The distribution of OLS estimators; Hypothesis testing and confidence intervals; Goodness of fit.

4. Game Theory I Vladimir I. Danilov, NES and CEMI Topics: Expected utility theory; extensive and normal form games; solution concepts including dominant strategy, Nash, perfect and proper equilibrium; repeated games; games with communication; Bayesian games; bargaining; cooperative game theory and the core; the Shapley value; social choice; Groves mechanisms.

Second Year Courses: 1. Time Series Analysis James Durbin, LSE A time series is composed of trend, seasonal, regression and error components. The course begins by considering state space models for these components and their estimation by Kalman filtering and smoothing. The fitting of the models by maximum likelihood is developed. The state space approach to time series analysis is compared to the Box-Jenkins approach. The use of the models for forecasting is considered. Diagnostic tests for model selection are discussed. The course is illustrated on the STAMP computer package using real series. Some treatment of time series analysis of non-Gaussian data is included.

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2. Labor Economics I Zvi Eckstein, Tel-Aviv U. The goal of this course is to introduce basic concepts, theories and empirical methods of labor economics. The first topic is the concept of Earning function. We introduce the theory that is related to this concept and a few empirical questions that can be investigated using the earning function. The students are expected to use actual data in order to implement an empirical study related to this concept. The second topic is labor supply and job search theory. We present the theory and the estimation of the standard search model.

3. International Economics: Nominal Exchange Rates Benjamin Bental, Technion, Haifa The monetary aspects of international economics are hard to analyze. In particular, as we lack a good understanding of the role of money in closed economies, the international impact of the relative price of one currency in terms of another (the nominal exchange rate) is even more elusive. It is hardly surprising, therefore, that this field suffers from a lot of confusion. Given this state of affairs, the goal of this course is to expose the students to the issues and to try and bring some order into the discussion. It reflects the lecturer's bias and relies of heavily on the contributions made by the "Minnesota School," as these models seem to be the most explicit, i.e. it is easy to understand what their key assumptions are and what drives the results.

4. Economic Growth Benjamin Bental, Technion, Haifa The course deals with the phenomenon of economic growth, which is essentially the growth process of GNP. In the first part, the course describes the growth process that is generated solely by the accumulation of one factor of production, i.e. of capital. Later the course turns to exogenous technological improvements as a source of growth. Finally the process that generates technological progress is endogenized. Some empirical implications of these models are discussed.

5. The Economics of Natural Resources II Oleg Eismont, Moscow This is the second part of the course which focuses on problems of intertemporal equitable distribution of exhaustible resources; natural resources and national accounting; imperfect competition and the theory of natural resources; taxation and regulation of natural resource use.

6. East and West: Russia in World Economic History I Leonid Friedman, Vitalyi Meliantsev, MSU The main theme of the course is the comparative analysis of the levels, rates of growth, and main factors contributing to economic development of the countries of the west, east, and Russia. The focus of the course will be on the material and social factors which contributed to contemporary economic growth in various groups of countries.

7. Health Economics and Policy Dov Chernikhovsky, Ben Gurion The objective of the course is to introduce principles of health economics in the context of the Russian health system reform needs and actions. The course includes the following topics: The health system in the economy; Health, medical care, and the health production function; The markets for medical care and health insurance, and market failure; Consumer demand for health, medical care, and health insurance; Public demand for health and medical care; Long and short term supply of physician services, hospital beds and paying for hopitalization; Health policy objectives and models for financing and organizing health services; Next steps in reforming the Russian health system.

8. Research Workshop II Zvi Eckstein, Tel-Aviv University.

Period 4: March 11 - April 26, 1995 (Exams: April 27 - May 3) First Year Courses: 1. Advanced Microeconomics I Julian Manning, Norwegian School of Management (Main textbook: Microeconomic Theory, A. Mas-Colell, M. Whinston & J. Green) Topics: Preference and choice, choice under uncertainty, basic elements of non-cooperative games, simultaneous move games, dynamic games.

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2. Advanced Macroeconomics II Michael Rockinger, Hautes Etudes Commerciales (Main textbook: Lectures on Macroeconomics, O. Blanchard and S. Fisher) This course first covers the theory of investment without uncertainty including the Jorgensen-Hall user cost of capital and Tobin's q approaches. The second part of the course is on growth theory including the Solow and endogenous growth models. The third part of the course looks at Macro and Finance, in particular at the capital asset pricing model and volatility. Finally, the course covers models of investment under uncertainty.

3. Econometrics II Bronwyn Hall, U. of California, Berkeley (Main textbook: Econometric Models and Economic Forecasts, third edition, R. Pindyck & D. Rubinfeld) Topics: Instrumental variable estimation, time series models, forecasting.

4. Game Theory II Vladimir Danilov, NES and CEMI (See Period 3)

Second Year Courses: 1. East and West: Russia in World Economic History II Leonid Friedman, Vitalyi Meliantsev, MSU The second part of the course focuses more closely on Russia beginning with the growth of the Russian economy from the 18th century followed by the industrialization and collectivization of the early Soviet period; the post-War period; the breakup of the Soviet Union and a comparison of the economies of the former republics; the transition period; and the role of Russia and the CIS in the world economy.

2. Applied Financial Economics Bronwyn Hall, U. of California, Berkeley; Michael Rockinger, Hautes Etudes Commerciales This course is a survey of recent applied work in the area of financial economics. The course has two goals: 1) to introduce the student to the economics of finance at the level of the individual enterprise (corporate finance) and at the economy-wide level (financial markets and asset pricing) 2) to introduce the use of a set of advanced econometrics techniques for the analysis of financial data.

3. Public Economics Julian Manning, Norwegian School of Management The objective of this course is to give a brief introduction to the literature on public finance, emphasizing several specific, well defined topics and stressing key results. In the course, material is covered in: Voting and Pure Public Goods, Club Goods and Local Public Goods, Cost Benefit Analysis, Taxation, Inequality and Public Sector Pricing. In addition, if time permits, there is a special topics section where the students can pick papers from a prespecified list. There are three sets of homework and one final exam with weights to be specified by the lecturer in the first lecture.

4. Poverty & Inequality in Russia Alastair McAuley, University of Essex Poverty and inequality have become important features of post-socialist economies. There has been a great deal of work undertaken by western economists on these subjects in the last twenty or thirty years. The course reviews these theoretical developments and uses them to analyzer the situation in Russia and compares with Russia with other market economies.

5. Economics of Transition Viktor Polterovich, CEMI & NES The goal of the course is to acquaint the student with the transition of the formerly centrally planned economies and with the growing theoretical framework for analyzing that transition. The main focus is on the Russian transition. Topics covered include background material on Soviet-type economies; disequilibrium models of resource allocation; price liberalization and welfare economics; privatization; the labor market in the transition period; the fall in output, credit rationing and arrears; inflation and stabilization

6. Research Workshop III Daniel Kahn, Georgetown University.

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Period 5: May 6 - June 23, 1996 (Exams: June 22 -June 26) First Year Courses: 1. Advanced Microeconomics II Richard Ericson, Columbia University (Main textbook: Microeconomic Theory, A. Mas-Colell, M. Whinston & J. Green) This course provides a basic survey of the modern theory of general competitive equilibrium, its existence, welfare, and comparative statics properties and its extension to encompass uncertainty and intertemporal relations.

Advanced Macroeconomics III Barry W. Ickes, Penn State University. (Main textbook: Lectures on Macroeconomics, O. Blanchard and S. Fisher) Topics: theoretical and empirical analysis of consumption behavior; equilibrium business cycles; New Keynesian models; Fisher-Taylor staggered contracts model; efficiency wage models of the labor market

Econometrics III Geert Ridder, University of the Netherlands (Main textbooks: Econometric Models and Economic Forecasts, third edition, R. Pindyck & D. Rubinfeld; Econometric Analysis, 2nd edition, W. Greene) Topics: simultaneous equations, seemingly unrelated regressions, panel data, distributed as, nonlinear estimation and generalized-methods-of-moments estimation. The methods are motivated by economic applications and the students are expected to apply some of the methods to data.

Second Year Courses: 1. Advanced Macroeconomics III Barry W. Ickes, Penn State University. (Main textbook: Lectures on Macroeconomics, O. Blanchard and S. Fisher) Topics: financial imperfections and the credit view of monetary policy; efficiency wage models; positive theory of economic policy; real business cycles

2. Dynamic Economic Models Richard Ericson, Columbia University. This course develops the tools of dynamic stochastic programming and illustrates their use through application to various dynamic economic models. It also introduces an analysis of intertemporal equilibrium models and of stochastic games.

3. Labor Economics II Geert Ridder, University of the Netherlands This course continues the study of search models but treats employers and employees more symmetrically. This requires an "explanation" of the imperfect information regarding the availability and terms of employment as the outcome of some market process. We distinguish between two types of models: models that focus on imperfect information on the terms of employment (in particular on the wage) and models that concentrate on the search technology (in particular on the rate at which contracts are made between employers and prospective employees). We start with equilibrium search models with an emphasis on estimable models that can and have been confronted with data. The second part of the course deals with models that emphasize the "production" of contracts, although the terms of employment are also considered.

4. Research Workshop IV Daniel Kahn, Georgetown University

English Language at NES The following courses were offered as part of the academic program: • Pre-session Intensive English Course (14 days, 6 academic hours per day) The purpose of this course is to prepare new students for the academic year, and to ease their adaptation to the English language environment at NES. The program focuses on listening comprehension and note-taking, as well as acquaintance with economic terminology. The program is split into three main parts: English for Specific Purposes (Economics); English for Academic Purposes (listening to lectures, note-taking, improving reading efficiency); and General English. • In-session English Course (4 hours per week) Fall semester. Based on their performance in English examinations, first year students take either intermediate (General English) or advanced courses (Writing Skills ; Oral Presentation). Self-study in the Language Laboratory is considered to be an integral part of training in English.

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Winter and Spring Semesters. After covering the core subjects in the previous semester, the advanced students are free to decide whether they need any further instruction in English. Those who opt to continue are given a choice of two courses: General English or Grammar Review. Intermediate students are obliged to enroll in the course comprising: general English; writing skills and oral presentation skills.

Examinations are held at the end of the semester for intermediate students only.

NES Annual Report 1995/96, Page 13 Statistical Report on Courses First year Courses

Course Professor Semester Academic # of Average Excellent % Good % Fair "3" % Failed % hours per students Grade "5" "4" "2" semester Macroeconomics Avner Bar-Ilan Fall I 28 55 3.7 8 15% 21 38% 20 36% 6 11% (University of Haifa) Microeconomics Daniel Kahn Fall I 28 55 3.8 8 15% 23 42% 23 42% 1 2% (Georgetown University) Macroeconomics Brigitte Granville (Royal British Fall II 28 51 3.8 9 18% 28 55% 18 35% 1 2% Institute) Microeconomics Alla Friedman (NES) Winter 28 51 3.6 7 14% 27 53% 14 27% 2 4%

Probability Theory Sergei Aivazian (CEMI) Fall 56 55 3.8 9 16% 27 49% 14 25% 4 7% and Statistics Advanced V. Polterovitch (CEMI), Fall 56 11 4.7 7 64% 28 255% 16 145% 2 18% Mathematics for V.Shananin(RAS), V.Levin(CEMI), Economists F.Zak (CEMI), V.Danilov (CEMI), E.Golstein (CEMI)

Mathematics for V.Shananin (CEMI) Fall 56 14 4.2 6 43% 3 21% 0 0% 0 0% Economists Macroeconomics V.Polterovich (CEMI) Winter 28 44 3.8 15 34% 4 9% 2 5% 1 2%

Microeconomics Daniel Kahn Winter 28 44 3.8 7 16% 10 23% 19 43% 1 2% (Georgetown University) Econometrics P.Katyshev (CEMI), A.Peresetsky Winter 28 44 3.6 5 11% 23 52% 13 30% 2 5% (CEMI) Microeconomics J.Manning (Norwegian School of Spring I 28 42 4.3 21 50% 19 45% 19 45% 1 2% Management) Macroeconomics Michael Rockinger (Hautes Etudes Spring I 28 42 3.9 10 24% 11 26% 9 21% 1 2% Commerciales) Econometrics Bronwyn Hall (Stanford University) Spring I 28 41 3.8 6 15% 18 44% 14 34% 0 0%

Game theory V.Danilov (NES, CEMI) Spring I 56 30 4.3 10 33% 20 67% 15 50% 0 0% Microeconomics R.Ericson Spring II 28 41 3.7 12 29% 19 46% 1 2% 0 0% Macroeconomics B.Ickes Spring II 28 40 3.5 9 23% 10 25% 19 48% 0 0% Econometrics Geert Ridder Spring II 28 41 4.0 8 20% 11 27% 16 39% 5 12% English Regina Burdonskaya (NES) Fall and 158 43 4.0 11 26% 21 49% 11 26% 0 0% Winter

Second Year Courses Course Professor Semester Academic Total # Average Excellent % Good % Fair % Failed % hours per of Grade "5" "4" "3" "2" semester students Industrial Organization Chaim Fershtman (Tel-Aviv University) Fall I 28 15 4.2 5 33% 8 53% 2 13% 0 0% Banking Moshe Kim (University of Haifa) Fall I 28 24 3.8 8 33% 7 29% 5 21% 4 17% The Structure of Production and Moshe Kim (University of Haifa) Fall I 28 13 3.9 5 38% 2 15% 5 38% 1 8% Productivity analysis International Trade Avner Bar-Ilan (University of Haifa) Fall I 28 18 3.7 4 22% 8 44% 5 28% 1 6% Topics in International Economics Andrew Warner (Harvard University) Fall I 28 26 4.3 10 38% 12 46% 4 15% 0 0% Industrial Organization Michael Baye (Penn State U) Fall II 28 22 4.5 13 59% 6 27% 3 14% 0 0% Public Economics Rohan Pitchford (Australian National U) Fall II 28 26 4.1 10 38% 8 31% 8 31% 0 0% Contract Theory Rohan Pitchford (Australian National U) Fall II 28 14 4.0 4 29% 7 50% 3 21% 0 0% Property Rights and Economic Theory Daniel Kahn (Georgetown University) Fall II 28 8 4.3 3 38% 4 50% 1 13% 0 0%

The Theory of Risk and Economic Vladimir Rotar (CEMI) Fall I, II 56 20 4.2 7 35% 9 45% 3 15% 1 5% Mechanisms of Stabilization Industrial Economics Van Hulst (Tilburg University) Fall I 28 1 5.3 1 100% 0 0% 0 0% 0 0% Advanced Macroeconomics Henk Gremen (Tiburg University) Fall I 28 1 5.0 1 100% 0 0% 0 0% 0 0% Institutional Economics Ad Nagelkerke (Tilburg University) Fall II 14 1 4.0 0 0% 1 100% 0 0% 0 0% International Financial Markets Van Roij (Tilburg University) Fall I 14 1 5.3 1 100% 0 0% 0 0% 0 0% Development Economics Ruud Picavet (Tilburg University) Fall II 28 1 5.0 1 100% 0 0% 0 0% 0 0% Research Workshop 1:Term Paper Michael Baye (Penn State University) Fall II 28 4 4.3 1 25% 3 75% 0 0% 0 0% Research Workshop 1:Term Paper Andrew Warner (Harvard University) Fall II 28 10 4.4 4 40% 6 60% 0 0% 0 0% Research Workshop 1:Term Paper Moshe Kim (University of Haifa) Fall II 28 1 4.7 1 100% 0 0% 0 0% 0 0% Research Workshop 1:Term Paper Oleg Eismont (RAS, ISA) Fall II 28 1 5.0 1 100% 0 0% 0 0% 0 0% Research Workshop 1:Term Paper Avner Bar-Ilan (University of Haifa) Fall II 28 2 4.2 0 0% 2 100% 0 0% 0 0% Research Workshop 1:Term Paper Brigette Granville (Royal Institute of Fall II 28 2 5.0 2 100% 0 0% 0 0% 0 0% International Affairs, RECEP)

Research Workshop 1:Term Paper Sergei Aivazian (CEMI) Winter 28 1 5.0 1 100% 0 0% 0 0% 0 0% Research Workshop 1:Term Paper Daniel Kahn (Georgetown University) Winter 28 1 4.0 0 0% 1 100% 0 0% 0 0% Research Workshop 1:Term Paper Chaim Fershtman (Tel-Aviv University) Fall I 28 2 4.9 2 100% 0 0% 0 0% 0 0% Research Workshop 1:Term Paper Valery Makarov (CEMI) Fall II 28 1 4.0 0 0% 1 100% 0 0% 0 0% Research Workshop 1:Term Paper John Anderson (IMF) Winter 28 1 3.7 0 0% 1 100% 0 0% 0 0% Research Workshop 1:Term Paper Rohan Pitchford (Australian National U) Fall II 28 1 4.0 0 0% 1 100% 0 0% 0 0%

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Course Professor Semester Academic Total #of Average Excellent % Good % Fair % Failed % hours per students Grade "5" "4" "3" "2" semester

Research Workshop 1:Term Paper Fedor Zak (CEMI) Fall II 28 1 4.0 0 0% 1 100% 0 0% 0 0% Research Workshop 1:Term Paper Alexey Pomansky (CEMI) Fall II 28 3 4.0 1 33% 1 33% 1 33% 0 0% Research Workshop 1:Term Paper H. van Gemert (Tilburg University) Fall II 28 1 1 100% 0 0% 0 0% 0 0% Research Workshop 11: Michael Baye (Penn State University) Fall II 28 14 5.0 13 93% 1 7% 0 0% 0 0% Presentation and Participation The Economics of Natural Resources Oleg Eismont (RAS, ISA) Fall II, Winter 56 12 4.2 6 50% 3 25% 2 17% 1 8%

Time Series Analysis Jim Durbin (LSE) Winter 28 18 4.5 10 56% 6 33% 2 11% 0 0% Growth Theory Benjamin Bental (Technion, Haifa) Winter 28 29 3.9 5 17% 17 59% 7 24% 0 0% International Economics Benjamin Bental (Technion, Haifa) Winter 28 19 4.0 4 21% 12 63% 3 16% 0 0% Labor Economics Zvi Eckstein (Tel-Aviv University) Winter 28 15 4.5 10 67% 4 27% 1 7% 0 0% Research Workshop 11: Zvi Eckstein (Tel-Aviv University) Winter 28 19 4.3 8 42% 9 47% 2 11% 0 0% Presentation and Participation Research Workshop 11: Daniel Kahn (Georgetown University) Spring I 28 passed Presentation and Participation Public Economics Julian Manning (Norwegian School of Spring I 28 4 3.9 2 50% 1 25% 0 0% 1 25% Management) Poverty and Inequality in Transition Alastair McAuley (University of Essex) Spring I 28 14 4.3 7 50% 4 29% 3 21% 0 0%

Applied Financial Economics Bronwyn Hall (University of California, Spring I 56 24 4.0 10 42% 6 25% 6 25% 2 8% Berkeley), Michel Rockinger (Hautes Etudes Com) Economics of Transition Viktor Polterovich (CEMI, NES) Spring I 28 10 4.0 5 50% 1 10% 4 40% 0 0% Health Economics and Policy Dov Chernikhovsky (Ben Gurion Winter, 28 13 4.4 6 46% 6 46% 1 8% 0 0% University) Spring I East, West and Russia in World Leonid Fridman (MSU), Winter, 56 16 4.3 6 38% 10 63% 0 0% 0 0% Economic History Vitaly Meliantsev (MSU) Spring I History of Economic Thought Revold Entov (IMEMO, RAS) Fall I,II 56 32 3.7 7 22% 14 44% 11 34% 0 0% Labor Economics Geert Ridder (Uni Netherlands) Spring II 28 7 4.2 3 43% 3 43% 1 14% 0 0% Advanced Macroeconomics Barry W. Ickes (Penn State University) Spring II 28 12 4.0 6 50% 2 17% 2 17% 2 17% Dynamic Economic Models Richard Ericson (Columbia University) Spring II 28 6 3.6 2 33% 2 33% 0 0% 2 33% English Regina Burdonskaya (NES) Fall and 158 47 4.3 20 43% 24 51% 3 6% 0 0% Winter

NES Annual Report 1995/96, Page 16 Public Seminar NES hosts a public seminar in which visiting and Russian faculty members, as well as prominent Russian and non-Russian economists present their own research. The following is a list of speakers from the academic year 1995-96.

Alexander Ageev Michael Intriligator Vice President, Avia Bank Professor of Economics The Renaissance of the Military Industrial Political Science and Policy Studies, UCLA Complex in the Period of Reform: the What Went Wrong with Russian Economic Experience of the Russian Aviation Industry Reform

Andrei R. Belousov Vladimir V. Kossov Laboratory Head, the Institute of Forecasting Deputy Minister of the Economy The Russian Economy in the mid-1990's Investment Policy

Daniel Berkowitz Herb Levine Assistant Professor of Economics, University of Professor of Economics, University of Pennsylvania Pittsburgh Some Observations on the New Institutional Transition in Russia: It's Happening Economics

Yuri Boldyrev Robert McIntyre Head of the Public Accounts Commission, Russian Professor of Economics, Bowdoin College & The Federation Institute for Policy Studies Governmental Oversight and the Economy Intermediate Structures and Economic Reform Dov Chernikhovsky Professor of Economics, Ben-Gurion University of the Judith Shapiro Negev Goldsmith's College, London University & RECEP Growing Regional Inequalities in Health The Demographic Crisis in Russia: An Finance in Russia and their Potential Economic Analysis Impact on the Health of the Population Viktor L. Sheinis Brigette Granville and Viktor Polterovich Doctor of Economics, member of Yabloko RIIS and RECEP; CEMI and NES Russian Politics before the Elections Recession and Inflation in Russia Oded Stark Gregory Ingram, Senior Economist, The World Bank Professor of Economics, Oslo University Infrastructure for Development The Migration of Labor

Oleg V. Vyugin Director of the Department of Macroeconomic Policy, The Ministry of Finance The Budget and Financial Policy

1. NES Research Center: Transforming Government in Economies in Transition (GET) (September 18, 1995) This was the first of the NES Research Center’s annual workshops in which Russian and non-Russian scholars presented papers on the central issues related to the GET project. This workshop enabled input into the formulation of specific projects to be undertaken by the Center.

This workshop was divided into four sessions: Fiscal Issues; The GET Proposal; Public Choice Perspectives on Transition; and Legal and Regulatory Reform. The following presented papers or were discussants: Sergei Alexashenko (Expert Institute), Mario Blejer (IMF), Marek Davrowski (CASE), Mikhail Dmitriev (Institute of Economic Analysis), Chaim Ferschtman (Tel-Aviv University), Katherine Hendley (University of Wisconsin), Barry Ickes (Penn State University and NES), Arie Hillman (Bar-Ilan), Alexei Lavrov (Institute of Economic Analysis), John Litwack (OECD), Mario Nuti (London Business School), Gur Ofer (Hebrew University and NES), Victor Polterovich (CEMI and NES). See Appendix A for the workshop program.

2. The European Forum on Democracy and Solidarity: Second Generation Transition Problems (April 5, 1996) NES organized and hosted a one day conference for the European Forum on Democracy and Solidarity. Main speakers were John Eatwell (Cambridge University), D. Mario Nuti (University la Sappenta, Rome), Judith Shapiro (University of London), Alistair McAuley (University of Essex and NES), and Michael (University of Amsterdam).

Papers covered international trade policy, industrial development and economic growth; macroeconomics after stabilization; economics of health; targeting of social security and the economics of corruption.

3. International Advisory Board: Fourth Annual Conference (April 12, 1996) It has become the tradition at NES to hold an annual scientific conference in conjunction with the annual meeting of the International Advisory Board. This year the fourth of such conferences attracted members of the economic community of Moscow, political and financial leaders, businessmen and NES students and faculty.

The keynote speaker was Alexander Livshits, Economic Advisor to the President of Russia, who spoke on the topic: The Current Economic Situation and the Presidential Elections in Russia.

4. NES Research Center: Transforming Government in Economies in Transition (GET): End of Year Conference (September 4-6, 1996) The Center’s activities for the academic year were brought together in an end-of-year conference on September 4-6.

The opening session was addressed by Maxim Boycko, Deputy Chief of staff to the president of Russia. At subsequent sessions, papers reporting on each of the Center’s projects were read. Of particular interest, were the papers by two graduating students: Aleksei Medvedev (A Model of a Transition Economy with a Monopolized Mining Sector) and Sergei Bobyr (On Housing Subsidies in Russia.) The conference was attended by professional economists from Government institutions, academic institutes and international agencies. It, too, provided an opportunity to demonstrate to the wider research community in Moscow what type of research is being conducted at NES.

You will find the programs for the Research Center conferences in the section entitled Research at NES. Other conference programs are in Appendix A.

STAFF AND FACULTY DEVELOPMENT

2 Although the staff and permanent faculty at NES are small in number, and cannot be spared for release from duties easily, considerable efforts have been made to give development opportunities where access was possible.

Institutional and Curriculum Development Training NES is involved in the International Affairs Network (IAN) designed to enhance the international affairs capacity of schools in Eastern and Central Europe and the former Soviet Union. IAN is a collaborative venture involving APSIA ( Association of Professional Schools of International Affairs), Pittsburgh’s Graduate School of Public and International Affairs (GSPIA), its International Management Development Institute (IMDI), and partner institutions in the region. Zarema Kassabieva, NES’s Dean of Students, who was awarded a fellowship from International Affairs Network Program, spent six months at the Graduate School of International Studies, University of Denver. This IAN Faculty Fellowship Program was organized with the sponsorship of Pew Charitable Trust. Zarema worked together with GSIS’ Associated Dean Professor Karen Feste as her mentor on academic management and curriculum development issues, degree program organization, funding quests, teaching methods and policy research strategies at APSIA schools. She audited a number of graduate courses in Economics and International trade at GSIS; visited leading American Universities and international organizations; attended lectures, workshops and panel presentations of leading professors, advanced teachers, economists and policy makers; and participated in training workshops for IAN Fellows in Washington and Pittsburgh on the topic of the 95/96 Faculty Fellowship Program, Bargaining and Negotiations, and also on institutional development and strategic planning issues.

Financial Development Training In the academic year of 1995-96 our International Administrator, Oxana Budjko, attended two seminars on institutional financial development. In September 1995, the Institute for Local Government and Public Service, affiliated with the Open Society Institute, hosted a five day seminar on strategic financial planning for institutions of higher education. The main goal of the seminar was to introduce the technique of financial planning to HESP supported institutions in the FSU and former socialist states in Central and Eastern Europe. Oxana gained better understanding of what institutions should understand about themselves to secure their future and of which aspects financial planning might be useful in achieving the desired aims of the organizations. The seminar also made clear what existing and potential donors need to know about the institutions in order to provide financial support. The case studies and reports of other institutions also helped to give an idea of the innovative educational institution development in the region. In December 1995, International Affairs Network hosted a 3 day seminar in Prague in advanced fundraising and grant proposal writing. The seminar was conducted by a professional fund-raiser and was aimed at the fundraising activity of higher educational institutions. The following aspects were considered: exploring the world of money (individuals and institutions); defining potential donors; developing an overall fundraising plan; writing a proposal; and presenting a proposal to a decision- maker. Since IAN supports mainly well known and ‘old’ institutions, it was interesting to observe a shift from entire state support to seeking funds from businesses and people. Library Training NES Librarian Karina Ter-Akopian took part on 5-9 May 1996 in the INFO 96 Conference in Tel- Aviv. It was the 11th Annual International Information meeting held by one of the main information systems companies in Israel, TELDAN. The Conference included more than 30 sessions and workshops. The most important contributions were made by the representatives of the different companies from Israel, the American KRI DIALOG & DATA-STAR, and the British Library Document Supply Center. They all focused on the different aspects information activities: Business Information, the Electronic

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Libraries Program in Higher Education, Modern Technologies in Traditional Libraries, and the Future of Integrated Information Systems. Concurrent with the Conference was the representative exhibition on Hi-Tech Databases And Search Techniques demonstrating the latest information technologies and products, local and international. Discussions in the lobbies and the contacts with other librarians were important and opened the doors to Israeli libraries of different types, such as the libraries of the Tel-Aviv University, the libraries in the Bar-Illan Universities and the libraries in both parts of the Hebrew University in Jerusalem. It was a good experience from the point of view of the challenge of building the NES Library as a scientific library while keeping the Russian/foreign balance. The participation costs of $US1500 were paid by the Soros Foundation.

Faculty Development From September 14 to December 14,1995, two NES professors, Pavel Katyshev and Anatoly Peresetsky, were research fellows at The CentER for Economic Research, Tilburg University , Netherlands.

During this time they achieved the following: 1. Under supervision of the member of the NES International Advisory Board, Prof. Jan Magnus, they prepared a syllabus on Econometrics II and Econometrics III together with an accompanying package of problems sets and their solutions. 2. They attended graduate courses on Macroeconomics (Professors A. and H. Uhlig) and participated in number of research seminars 3. They collected materials and started writing a textbook entitled Introductory Econometrics for Russian students

Costs were shared between The CentER for Economic Research and NES.

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3 RESEARCH AT NES Research at NES is organized under the Research Committee of the school. The Committee is staffed by members of the International Advisory Board of NES and permanent faculty of NES. The current membership is Barry Ickes and Valery Makarov (co-chairmen), Pavel Katyshev, Gur Ofer, Victor Polterovich and Alastair McAuley. Research Center This year saw the establishment of the NES Research Center instituted to coordinate research at the school. It was established in January 1996 after NES received the first tranche of the Ford Grant on its umbrella program, Transforming Government in Economies in Transition (GET). The Center provides the policy and academic communities with important scholarship and serves to further the educational goals of NES.

The center has 2 directors - one Russian (Professor Victor Polterovich) and one western (Professor Alistair McAuley), both appointed by the research committee for a period of one year. The directorate runs the Center on a daily basis and oversees research in the framework of each of the projects approved and supported by the Center. In particular, it: • participates in the solicitation of projects and potential project leaders, • executes the preliminary screening of applications participating in the project competition, • coordinates the work of the different projects, including the organization of seminars, receives reports from project leaders, and • is responsible for the selection of students and assistants for participation in the projects of the Center.

In January 1996 and subsequently, the Research Committee decided to accept six projects for inclusion in GET Program for the academic year 1995-96 and work on them is under way:

1. Recession, Stabilization and Industrial Policy. Project leaders B Granville (the Royal Institute of International Affairs and RECEP), and V. Polterovich ( CEMI and NES) 2. Banking and Finance. Project leaders L. Sycheva (member of a group of independent experts specialized on monitoring and analysis of Russian financial markets) and A. Warner (Harvard) 3. Pension Reform in Russia. Project leaders: M. Dmitriev (Carnegie Endowment for International Peace) and B. Ickes (Pennsylvania State University and NES) 4. Reform of Social Protection in Russia Project leaders: V. Kosmarsky (Institute of Economic Analysis) and A. McAuley (Essex University) 5. Health Policy and Management. Project leaders - D. Chernichovsky (Beer Sheva University) and V. Makarov (NES and CEMI) 6. Regional Policy and Fiscal Federalism in Russia. Project leaders - A. Lavrov (Union of Industrialists and Entrepreneurs) and A. McAuley (Essex University)

Four students were recruited to work on each of the above projects. Student participation in the projects involves discussion of their individual research, provision of research assistance to project leaders, participation in joint sessions of the group and seminars. Weekly seminars for students are organized by each project.

Work on most of the projects listed above has been completed and preparations are in hand for the selection of the second set of projects; that is, those that will be financed by GET in 1996-97. To date the list of projects for 1996-97 and their leaders are as follows: 1. Government, Education and Science in the Transitional Period: Russia in a world context. L. Friedman & M. Spagat 2. Russian Industry after Privatisation: institutional change and behavioral response Polterovich & L. Polishchuk 3. Monetary and Tax Policy of a Government in Economy in Transition M. Alexeev & S. Movshovich.

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4. Poverty in Russia: relative deprivation and social exclusion Alastair McAuley & L. Ovcharova 5. The Performance of the Stock Market in Transition Economies G. Urga & A. Pomansky 6. Banking and Central Banking in an Emerging Capital Market: a comparison of Russia and Kazakhstan. B. Granville & a leader to be announced 7. Regional Economic Development Issues in Russia. Alastair McAuley & A. Lavrov.

The first steps have been taken to establish a GET Workshop. This will function as a forum for the analysis and discussion of the role of government in economic transition in Moscow. One of the objectives in establishing the NES Research Center has always been to encourage the development of an intellectual community in Moscow with an interest in policy analysis. Several seminars have already been held in the framework of the Public Seminar.

1. The first meeting of the seminar was held in early February when Dr Judith Shapiro (of London University) talked about the Mortality Crisis in Russia. 2. The second meeting of the seminar was held on 29 February when Dov Chernichovsky talked about the growing inequality in regional health-care finance in Russia and its implications for the health status of the Russian population. 3. At the end of March, the Recession, Stabilization and Industrial Policy Project team held a seminar devoted to the issues of recession and inflation.

The Center also held two conferences during the year. 1. A one-day conference during this year's meeting of NES's International Advisory Board on April 11 was devoted to the ongoing activities of the Research Center. All projects were presented by a project leader and participants in the project. This gave the opportunity to demonstrate to the board's members and to the conference attendees what GET was, what it was doing and what it would do in the future.

2. The Center’s activities for the academic year were brought together in an end-of year conference in early September at which papers reporting on each of the Center’s projects were read. You can find the conference agendas below.

CONFERENCE 1 Transforming Government in Economies in Transition: A Workshop at the New Economic School September 18

10:00 AM, Conference Opens Session 1: Fiscal Issues 10:00 to 1:00 • Sergei Alexashenko, Expert Institute, "The Long-Run Fiscal Transition in Russia" • Alexei Lavrov, Institute of Economic Analysis, "Regional Fiscal Issue Relations in Russia" • Mikhail Dmitriev, Institute of Economic Analysis, "Social Expenditures"

Discussants: • Mario Blejer, International Monetary Fund • John Litwack, OECD

Session 2: The GET Proposal 2:30 to 5:30 • Barry W. Ickes and Gur Ofer, "The GET Project" • Mario Nuti, London Business School, "The Role of the State in Post-communist Economies"

Discussants: • Arie Hillman, Bar-Ilan University • Mario Blejer, IMF September 19

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Session 3: Public Choice Perspectives on Transition 10:00 to 1:00 • Arie Hillman, Bar-Ilan University, "Rent and the Transition" • Marek Dabrowski, CASE, "A Comparison of Transition Strategies in the Eastern Europe and FSU"

Discussants: • Chaim Ferschtman, Tel-Aviv University • Victor Polterovich, CEMI and NES

Session 4: Legal and Regulatory Reform 2:30 to 5:30 • John Litwack, OECD, "Legality and Transition" • Kathryn Hendley, University of Wisconsin, "Legal Aspects of Transition"

Discussants: • Daniel Kahn, Georgetown University and NES • Mario Nuti, LBS

...... CONFERENCE 2

END-OF-YEAR CONFERENCE IN THE FRAMEWORK OF THE “TRANSFORMING GOVERNMENT IN ECONOMIES IN TRANSITION” RESEARCH PROGRAM

PROGRAM Wednesday 4 September 1700 Valerii Makarov: Introductory Remarks 1715-1845 Maxim Boycko (Deputy Chief of Staff to President) Russia’s Economic Reform: retrospect and prospects

Thursday 5 September Chair G. Ofer 1000-1130 Recession and Stabilization in Russia V. Polterovich Inflation and Recession in a Two Sector Model of the Transition B. Granville Inflation Stabilization and Fall of Production in Russia A. Medved'ev A Model of Transition Economy with Monopolized Mining Industry Discussant: S. Movshovich; J. Wermuth. 1200-1330 Banking and Banking Reform in Russia M. Dmitriev The Financial Position of Moscow Banks during a Period of Financial Stabilization A. Warner An Economic Analysis of the Russian Banking System L. Sycheva A Comparative Analysis of Bank Balances in Moscow and other Regions of Russia Discussant: V. Konovalov (World Bank) Chair B. Ickes

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1430-1600 Regional Policy and Fiscal Federalism in Russia A. Lavrov An Estimate of the Budgetary Autonomy of the Subjects of the Russian Federation A. McAuley The Determinants of federal-regional fiscal relations: equity or affluence? Discussant: P. Rutland 1600-1630 Coffee Break 1630-1800 Healthcare and Healthcare Finance in Russia V. Makarov (A title will be defined later) D. Chernihovsky and E. Potapchik The role of the Federal Government in the Russian Health System Discussant: V. Starodubov; G. Ofer.

Friday 6 September Chair V. Polterovich 1000-1130 The Reform of Social Protection in Russia A. McAuley A Reassessment of the Scale of Poverty in Russia: the effects of using equivalent income. T. Maleva A Slowdown in Income Differentiation in 1995: facts and doubts. S. Bobyr Housing Subsidies in Russia Discussant: M. Alexeev 1200-1330 The Reform of Pension Provision in Russia B. Ickes Pension Reform in Russia M. Dmitriev Alternative Scenarios for Pension Reform in the Russian Federation Discussant: E. Gontmakher 1330-1345 V. Polterovich, A. McAuley GET--the next year

Papers either in Russian or in English. In each case summary (thesis) will be provided in the other language...... The development of research databases An early and important ongoing task of the Research Center is the collection of data in the following main areas: macroeconomics, finance, demography and regional data. It is the intention of the Center that these databases will facilitate research through easy accessibility to student and faculty researchers; local, regional and international scholars; and government and business personnel. The main work to date has been on design of the various databases; however, processing of data has begun and information on the data available has been disseminated among the GET project participants.

Student Research All second year students wrote a Master’s thesis, many of which were completed within the GET framework. The topics are listedon the next page. For abstracts and supervisors, please see Appendix.

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Theses passed with Distinction Galina Borissova: Russian Foreign Trade: Influence of Real Exchange Rate and Regulations Alexei Deviatov: Inflation and Output in Russia: Is there a Link? Dmitry Druzhinin: Dynamic Duopolistic Price Competition With Brand Loyalty

Theses passed with Excellence Sergei Bobyr: Housing Subsidies in Russia Alexei Onatski: Efficiency of Profit Tax Collection in Russia: Regional Aspect Alexei Medvedev: Recession in Russia in the early stages of reforms Yevgeniy Yuzefovich: Covered Interest Parity in Russia

Theses awarded a Pass Mikhail Alexandrovsky: Pricing and Advertising under Vertical Control. Dmitry Andrienko: Shares of Banks in The Russian Stock Market Souren Bassov: Individual Investment in Health, Education and Individual Savings: General Equilibrium Approach. Oleg Darg: Some aspects of Companies’ behavior in a market economy and their implications in growth theory Artem Dournev: Pension Reform in Russia. An Economic Analysis of Pension Fund Regulation. Search Model with and without Insurance Lev Ivanov: The Trend In Real Ruble Appreciation Vladislav Kargin: Interregional Integration in Russia Mikhail Konkov: Pay as you go pension system under economic and demographic transition in Russia Elena Krasnokutskaya: Structural Changes in the Russian Economy Edgar Lakalin: Real Wages and Inflation Irene Lapidus: The Attractiveness of Investments in the Russian Oil-producing Sector. Vitaliy Natarov: Incentives for spin offs in health insurers' organization Yaroslav Pededri: The Influence of Economic and Social factors on the Formation of Political Preferences Julia Rodionova: Economic loss from cardiovascular mortality in Russia Elena Romanova: Regional QALYs (Quality Adjusted Life Years). The Health Priorities. Dmitry Sentchoukov: Arbitrage between primary and secondary markets for Russian Government Debt Notes (GKO) Sofia Sheidvassser: Regional DALYs and health priorities, Russia. Victoria Shestalova: Savings and Investment in Russia Kirill A. Sossounov: Testing Rational Expectations Hypothesis on the Russian Short-term Treasury Bills Market Robert Tchaidze Jr.: Unemployment Insurance. Russia's Context. Evgeni Trubach Alcohol Consumption in Russia Alexey Verbetski: Intergenerational Accounting in Russia Anton Volkov: A model of dividend payment by insurance companies Stanislav Volkov: Inflation and Money Demand in Russian Economy

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4 COOPERATION WITH OTHER INSTITUTIONS The year saw increased cooperation and interaction with a number of academic institutions abroad, in the region and within Russia. As the expert nature of NES is recognized, regional institutions setting up their programs are now looking to NES for assistance with curriculum and training of young faculty. Donetsk State University In May 1996, NES was approached by Alexander Liakh, Center for Political Studies, Donetsk State University for assistance in setting up their two year MA program in Economics. NES has invited a faculty member to come to NES in September 1996 in order to gain experience with NES’s MA program in Economics and to explore cooperation in developing a “State Regulation in Transition Economies” curriculum. During this visit NES will provide the opportunity to observe classes, become familiar with curriculum issues and the Research Center, meet with faculty, staff and students, and explore further options for cooperation. This visit will take place under the auspices of, and with funding from, HESP.

International College, Moscow State University NES was able to assist the International College of the Moscow State University through facilitating their access to Russian faculty to teach in their joint degree program with University of Colorado at Denver. Both Dr Alla Friedman (Microeconomics) and Dr Pavel Katyshev (Econometrics) from NES have been teaching in English on this program.

Higher School of Economics (HES) In December 1995, a meeting was set up to discuss cooperation between NES and the Higher School of Economics (HES). During this meeting, which was addressed by both Y. Kuzminov, Rector of HES and V. Makarov, Rector of NES, a list of fields of cooperation was agreed and a committee set up (R.Entov; L Lubimov and G Kantorovich from HES and A Friedman and V.Polterovich from NES) The committee was delegated the task of making the first concrete steps to realize a program of cooperation.

The agreed fields of possible cooperation are: • Exchange of professors for lectures and research • Coordination of assistants’ training including traineeships for teachers, students and graduates • Production and publication of teaching aids for courses (including commercial ventures) • Joint educational programs and allied teaching materials • Joint support on various issues, in particular petitions etc. • Mutual use of schools’ libraries • Joint seminars, conferences • Cooperation in supervising and assessing degree papers • Cooperation in engaging graduates including those returning from traineeships and studies abroad to work as teachers, assistants etc. • Cooperation on matriculation issues • Joint publishing • Foundation of a high-level economic schools’ association

It was agreed that this list of fields is preliminary and open for further proposals

Summer Schools Throughout the year, NES students participated in a number of summer schools and international workshops.

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1. Oslo Summer School in Comparative and Social Science Studies (University of Oslo) The University of Oslo through a grant from the European Union’s TMR program (Training and Mobility of Researchers) kindly funded ten NES students to enable them to attend the Oslo Summer School. Students were funded for travel, School fees, and accommodation. The Summer School’s main objectives were: • to provide training for young European researchers at the post graduate and post-doctoral level • to inspire young researchers to take up comparative projects at as early a point as possible within their careers • to contribute to denser networks between European social scientists and research institutions working with various areas of comparative social science All students participated in Professor Oded Stark’s course, Moving and Returning held during the week 28 July to August 4. The students found the course most stimulating and enjoyed networking with scholars and other students from the European region. 2. 7th Jerusalem Summer School in Economic Theory (Hebrew University) NES’s strong links with The Hebrew University (HU) in Jerusalem continued and consolidated. HU is one of the Founders of NES and many of its professors have served as visiting faculty at the School and are working as current members of the IAB. Professor Gur Ofer of the Hebrew University has served as the Coordinator of the IAB from its inception. In June 1996 the Institute of Advanced Studies at The Hebrew University of Jerusalem conducted the 7th Jerusalem Summer School in Economic Theory. NES’s participation is becoming a tradition. This year five students and young faculty of NES participated. The main topic for 1996 was Political Economy. Among other topics the effects of alternative electoral and public decision-making systems on policy outcomes were analyzed. On the basis of best GPA and research work one first year student, three second year and one teaching assistant were selected to participate. The Summer School waived the registration fees, and the Israeli Embassy waived the consular fees. Other transportation and accommodation expenses were covered by NES.

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5 THE STUDENTS NES’s most valuable and important asset is its students: both current and past. This section: • profiles our current students at entry • lists those students who have graduated this academic year • gives details of the employment or continuing study of our graduates • details the university offers and placement in Ph.D programs of those graduating this academic year and gives a cumulative report on the academic placement of all graduates • provides a statistical report on the class to be admitted in the next academic year • describes progress in setting up an active alumni group

Current students: Profile NES continues to attract students of the highest caliber. The following provides a statistical profile of the first and second year students enrolled at NES in the academic year 1995-96. The tables reflect the high level of education of students prior to enrolling at NES, their regional diversity and gender balance.

TABLE 1: BACKGROUND INFORMATION ON STUDENTS ENROLLED AT NES IN 1995-96

A. CLASS OF 1997

# Name Sex D.o.B. Geographical Institution of prior study Degree origin 1 Blinkina Maria F 28-Feb-74 Moscow MSU Diplom 2 Bogdanova Maria F 24-Mar-74 Dolgoprudnii Mech. Math. Dep. Diplom Moscow Phys. Technical Institute 3 Vidiasov Mikhail M 9-Feb-72 Moscow Mech. Math. Dep. MSU Diplom 4 Goldman Elena F 21-May-73 Moscow Physics Dep. Diplom Moscow Phys. Technical Institute. 5 Gorovoy Vyacheslav M 6-Nov-70 Kaluga Physics Dep. MSU Post-grad. 6 Grigoriev Pavel M 10-Jan-72 Riga Mech. Math. Dep. MSU Post-grad. 7 Dobritsa Fedor M 15-Jun-73 Moscow Math. MIEM Post-grad. 8 Ezhova Olga F 27.01.74 Moscow Mech. Math. Dep. MSU Diplom 9 Ereschenko Anatoliy M 21-Oct-71 Moscow Mech. Math. Dep. MSU Diplom 10 Zhidko Dmitry M 27-Apr-72 Moscow Physics Dep. MIEM Diplom 11 Zhiltsov Alexey M 1-Aug-74 Moscow Mech. Math. Dep. MSU 12 Ibragimov Marat M 29-Apr-73 Stavropol' Mech. Math. Dep. MSU Diplom 13 Izmalkov Sergey M 26-Dec-72 Kar'kov Mech. Math. Dep. MSU Post-grad. 14 Kvasnevsky Vyacheslav M 28-Apr-71 Noginsk Baumanovskii Moscow Tech. Univ Diplom 15 Kolodeznikova Anastasia F 8-Oct-69 Moscow Economics Dep. International University 16 Korobeinikova Tatiana F 22-May-74 Moscow Mech. Math. Dep. MSU Diplom 17 Labutin Alexander M 3-Apr-73 Pavl. Posad Mech. Math. Dep. MSU Diplom 18 Manokhin Valery M 5-Jan-75 Moscow reg. Moscow Phys. Technical Institute. 19 Marinets Yuri M 5-Jun-68 L'vov Mech. Math. Dep. MSU Post-grad. 20 Matros Alexandr M 11-Apr-70 Petropavlovsk Mech. Math. Dep. MSU Post-grad. 21 Minkin Artur M 21-May-72 Kasan' Mech. Math. Dep. MSU Post-grad. 22 Melnik Konstantin M 14-Aug-71 Kishenev Physics Dep. MSU Diplom 23 Mikhailova Tatiana F 22-Nov-73 Moscow Mech. Math. Dep. MIET Diplom 24 Ovsienko Sergey M 13-Oct-72 Moscow. Physics Dep. Diplom Moscow Phys.Engineering Inst 25 Oleinikov Vladimir M 22-Mar-71 Bishkek Physics Dep. Post-grad. Moscow Phys. Technical Institute 26 Piankov Nikita M 24-May-75 Irkutsk Economics Dep.International University Diplom

NES Annual Report 1995/96, Page 28

# Name Sex D.o.B. Geographical Institution of prior study Degree origin 27 Rodionov Vladimir M 15-Jun-72 Cheboksari Physics Dep. Moscow Phys.Engin Inst. Diplom 28 Riazanova Olga F 3-Jan-70 Kirovo-Chipetsk Mech. Math. Dep. MSU Diplom 29 Savvateev Alexey M 13-Dec-73 Moscow Mech. Math. Dep. MSU Diplom 30 Semikoz Anna F 12-May-74 Moscow Mech. Math. Dep. MSU Diplom 31 Sonin Konstantin M 22-Feb-72 Moscow Mech. Math. Dep. MSU Diplom 32 Stepaniants Svetlana F 8-Oct-70 Chelyabinsk Mech. Math. Dep. MSU Post-grad. 33 Timonina Julia F 26-Aug-73 Moscow Math. MIEM Post-grad. 34 Fedorov Alexey M 9-Oct-71 Moscow Physics Dep. Moscow Phys.Engin. Inst Diplom 35 Fedorov Konstantin M 18-May-72 Moscow Mech. Math. Dep. MSU Post-grad. 36 Fedorova Ekaterina F 10-Sep-74 Fryazino Mech. Math. Dep. MSU Diplom 37 Fedikh Yuri M 9-Nov-67 Kaliningrad Mech. Math. Dep. MSU Post-grad. 38 Khmelevskaia Anna F 22-May-67 Moscow Mech. Math. Dep. MSU Diplom 39 Khovanski Sergey M 20-Jun-72 S-P Physics Dep. S-P. Unover Diplom 40 Chumak Yuri M 2-Apr-72 Sumi Mech. Math. Dep. MSU Diplom 41 Shakula Oxana F 10-May-72 Cherkassi Mech. Math. Dep. MSU Diplom 42 Shakhova Margarita F 25-May-73 Kiev Mech. Math. Dep. Diplom Moscow Phys. Technical Institute 43 Shimko Kristina F 31-Jul-74 Moscow Econ-Math Dep. Diplom Russian Economic Academy 44 Yashin Andrey M 10-Nov-74 Moscow Mech. Math. Dep. MSU Diplom

B. CLASS OF 1996

Name Sex D.o.B. Geographical Institution of prior study Degree origin* 1 Alexandrovsky Mikhail M 01-Mar-72 Moscow Moscow Econ. Statistical Institute 2 Andrienko Dmitry M 01-Jan-71 Tver Diplom 3 Bassov Souren M 30-Nov-68 Moscow Moscow Phys. Engineering Inst. Diplom 4 Bobyr Sergei M 19-Jan-74 Donetzk, Ukraine Moscow Phys. Math Institute. 5 Borisova Galina F 14-Nov-74 Moscow Economics Dep. of MSU Diplom 6 Deviatov Alexey M 07-Jul-70 Aleksandrov, Mech. Math. Dep., MSU Diplom Vlad.obl. 7 Dorokhov Roman M 30-Apr-72 Nab. Chelny, Physics Dep. MSU Diplom Tatarstan 8 Druzhinin Dmitry M 13-Dec-72 Cheliabinsk Moscow Phys. Technical Institute Diplom 9 Durnev Artyom M 13-Feb-74 Moscow Baumanovskii Moscow Tech. Univ.

10 Ivanov Lev M 23-Mar-68 Ulianovsk Mech. Math. Dep. of MSU Diplom 11 Kargin Vladislav M 30-May-74 Kazan Mech. Math. Dep. of MSU Diplom 12 Khodarin Gennady M 29-Aug-71 Lipetsk Mech. Math. Dep. of MSU Diplom 13 Konkov Mikhail M 20-May-69 Liubertsy Baumanovskii Moscow Tech. Univ. Diplom 14 Krasnokutskaya Elena F 17-Jul-71 Kirovograd, Ukraine Mech. Math. Dep. of MSU Diplom 15 Lakalin Edgar M 16-Sep-72 Stavropol Obl. Economics Dep. of MSU Diplom 16 Lapidus Irina F 06-Apr-71 Gomel, Belarus Mech. Math. Dep. of MSU Diplom 17 Medvedev Alexei M 17-Sep-74 Vladimir Mech. Math. Dep. of MSU Diplom 18 Natarov Vitaliy M 22-Dec-71 Kremenchug,Ukrain Applied Math. Dep. of MSU Diplom e 19 Novostavsky Vladislav M 14-Aug-69 Kiev Obl., Ukraine Mech. Math. Dep. of MSU Diplom 20 Onatsky Alexei M 17-Jun-69 Stavropol Mech. Math. Dep. of MSU Diplom 21 Peredriy Yaroslav M 21-Aug-71 Kiev, Ukraine Mech. Mathematics Dep., MSU Diplom 22 Rodionova Julia F 22-Sep-75 Moscow Economics Dep. of MSU Diplom 23 Romanova Elena F 08-Jan-72 Moscow Economics Dep. of MSU Diplom 24 Senchukov Dmitry M 10-Dec-72 Chernogolovka Applied Math. Dep. of MSU Diplom 25 Sheidvasser Sofia F 20-Mar-71 Krasnogorsk Moscow Phys. Engineering Institute Diplom 26 Shestalova Victoria F 16-Sep-67 Sumy, Ukraine Mathematics Dep. of MSU Diplom 27 Sosunov Kirill M 16-Feb-72 Volgograd Mathematics Dep. of MSU Diplom 28 Tchaidze Robert M 25-Dec-71 Tbilisi, Georgia Mech. Math. Dep. Tbilisi State Univ. Diplom 29 Trubach Evgeniy M 17-Dec-71 Bobruisk, Ukraine Moscow Phys. Engineering Institute Diplom 30 Verbetskiy Alexey M 30-Oct-70 Tbilisi, Georgia Mech. Math. Dep. Tbilisi State Univ. Diplom 31 Volkov Anton M 01-Apr-72 Moscow Applied Math. Dep. of MSU Diplom

NES Annual Report 1995/96, Page 29

32 Volkov Stanislav M 14-Dec-71 Sverdlovsk Mech. Math. Dep. of MSU Diplom 33 Yuzefovich Evgeniy M 25-Apr-72 Moscow Applied Math. Dep. of MSU Diplom

NES Annual Report 1995/96, Page 30 Graduates for the Academic Year 1995/6 The following 30 students were NES graduands in the ceremony held on 1 July this year. Two exceptional students, Galina Borisova and Alexei Onatsky, shared the Don Patinkin Prize, which was awarded for the first time.

At the ceremony, a number of graduands were also recognised for the quality of their master’s theses. The theses of Galina Borisova, Alexei Deviatov and Dmitry Druzhinin gained passes with distinction while those of Sergei Bobyr, Alexei Onatsky, Alexei Medvedev and Evegeni Yuzefovitch were passed with excellence.

Alexandrovsky Mikhail Konkov Mikhail Shestalova Victoria Andrienko Dmitry Krasnokutskaya Elena Sosunov Kirill Bassov Souren Lapidus Irina Tchaidze Robert Bobyr Sergei Medvedev Alexei Trubach Evgeniy Borisova Galina Natarov Vitaliy Verbetskiy Alexey Darg Oleg Novostavsky Vladislav Volkov Anton Deviatov Alexey Onatsky Alexei Volkov Stanislav Druzhinin Dmitry Peredriy Yaroslav Yuzefovich Evgeniy Durnev Artyom Romanova Elena Ivanov Lev Senchukov Dmitry Kargin Vladislav Sheidvasser Sofia

Employment and/or Academic Placement of Alumni NES is attempting to keep track of where its graduates are employed or studying. The following list is as complete as possible at the time of writing. It gives details for the Graduating classes of 1994 and 1995.

CLASS of 1994

1994/5 1995/6 1 Liudmila Belova Institute of Advanced Studies, Vienna, Special prog Coopers & Lybrand, Moscow, Assistant 2 Nina Chebotareva Center for Economic Research, IMF, Moscow, Research Assistant University of Tilburg 3 Irina Dolinskaia London School of Economics, M.Sc. Cambridge University, Ph.D. 4 Dmitri Dubasov Columbia University, Ph.D. Columbia University, Ph.D. 5 Arkady Dvorkovitch Economic Expert Group, the Russian Ministry of Finance, Duke University, Ph.D. Moscow, Economist 6 Konstantin Fominykh Arthur Anderson Consulting, senior consultant, Moscow Boston Consulting, associate consultant 7 Yuri Garbuzov Chicago Graduate School of Business, Ph.D. Chicago Graduate School of Business, Ph.D. 8 Maria Gorban London School of Economics, M.Sc. Russian Privatization Center, Expert, Moscow / Harvard Special program 9 Anna Gushchina University of Toledo, M.Sc. Coopers and Lybrand, Moscow, Assistant 10 Alexei Kalitin Western Ontario University, Ph.D. Rossisky Kredit, Moscow, Stock Management, Analyst 11 Tatyana Kirsanova London School of Economics, M.Sc. Russian-European Center for Economic Policy, Moscow, Expert 12 Victor Koledenkov Institute for Central and East European Studies, Catholic Rinacoplus, Moscow, Business Analyst University of Leuven, Special Program 13 Leonid Koryukin University of Maryland, College Park, Ph.D. University of Maryland, College Park, Ph.D. 14 Elena Kostyukova Institute for Central and East European Studies, Catholic Expert Institute of the Union of University of Leuven, Special Program (INTAS) Industrialists and Entrepreneurs, Expert, Moscow; Central Bank of Russia, General Economic Department, Economist, Moscow 15 Viktoria Kotova Ohio State University, M.Sc., (Muskie Program) Global Emerging Markets, Moscow, Analyst/Russian Expert Group, Economist 16 Max Kulikov Institute of Advanced Studies, Vienna, Special Program (Insti Economic Expert Group, the Russian Fellowship) MInistry of Finance, Moscow, Expert; Harvard Special Prog.

17 Dmitri Levando Brown University, Ph.D. Financial Academy, Ass. Professor, Moscow 18 Oxana Pavlenko Boston University, M.Sc. (Muskie Program) Russian-European Center for Economic Policy, Moscow, Expert CLASS of 1994 (cont.) 1994/5 1995/6 19 Maria Petukhova Brown University, Ph.D. Brown University, Ph.D. 20 Dmitri Podkopaev Harvard University, Ph.D. Harvard University, Ph.D. 21 Alexey Samoukov Commercial Bank, manager, Moscow Broker/Rinaco-Plus, Moscow Business Analyst 22 Vladimir Sergeev Institute for Central and East European Studies, Catholic Recursion, USA, Inc., Treasurer, Sales University of Leuven, Special Program Manager 23 Elena Sharipova Duke University, Ph.D. Duke University, Ph.D. 24 Dmitri Shatokhin MSU, softwear developer, Moscow MSU, Softwear Developer, Moscow 25 Tatyana Shevtsova National retraining fund, secretary, Moscow Economic Expert Group, the Russian Ministry of Finance, Moscow, GKO Expert / LSE Summer School 26 Stanislav Song London School of Economics, Special Program, Global Emerging Markets, Moscow, British Council and Know How Fund Program System manager 27 Sergei Song Yale University, Ph.D. Yale University, Ph.D. (FSEE, Fellowship) 28 Natalia Tsiganova IMF, Moscow, Research Assistant Catholic University of Leuven, PhD 29 Konstantine Tyurin CentER for Economic Research, Yale University, Ph.D. University of Tilburg, Special Program 30 Andrei Uspenski London School of Economics, M.Sc. Pioneer Investment, Moscow, Expert 31 Alexander Ustinov Institute for Central and East European Studies, Expert Institute of the Union of Catholic University of Leuven, Special Program Industrialists and Entrepreneurs, Expert, Moscow 32 Irina Yakadina Catholic University of Leuven, Ph.D. Barentt Group, consultant, Moscow 33 Ksenia Yudaeva MIT, Ph.D. MIT, Ph.D. 34 Ekaterina ZhuravskaiyHarvard University, Ph.D. Harvard University, Ph.D.

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CLASS of 1995 1995/6 1 Anton Afanasiev Postgraduate student of MSU, Moscow 2 Alexander Aganin Harvard University, Ph.D. 3 Irina Aganina Brandeis University, Ph.D. 4 Stanislav Anatoliev University of Wisconsin-Madison, Ph.D. 5 Maria Arbatskaia Indiana University, Bloomington, Ph.D. (University Fellowship) 6 Ekaterina Atanassian Institute for Central and East European Studies, Catholic University of Leuven, Special Program 7 Irina Bogatcheva Chicago Graduate School of Business, Ph.D. 8 Svetlana Danilkina NES, Teaching Assistant; International University, Assistant Professor 9 Oleg Darg LuckOil, Financial Manager, Moscow 10 Dmitri Davydov University of Michigan, Ann Arbor, Ph.D. 11 Tatyana Goltseva 1995: NES, International Administrator Assistant; 1996: Russian Privatization Center, Expert, Moscow 12 Nadya Ivanova Tilburg University, M.Sc. 13 Igor Kondrashin Unemployed/ Part-time work for NES 14 Maria Korobeinikova Catholic University of Leuven, M.Sc. 15 Grigory Kosenok 1995/6: Economic Expert Group, the Russian Ministry of Finance, Moscow, Expert; NES, teaching assistant 16 Yulia Kossykh Boston University, Ph.D. 17 Oleg Larichev Russian-European Center for Economic Policy, Moscow, Expert 18 Sofia Levtchenkova Australian National University, Ph.D. 19 Yulia Nikulicheva Institute for Central and East European Studies, Catholic University of Leuven, Special Program 20 Galina Ovtcharova Chicago Graduate School of Business, Ph.D. 21 Vladimir Pavlov Troika Dialog, Moscow; Australian National University, Ph.D. 22 Anna Pavlova University of Pennsylvania, Ph.D 23 Alexander Tilburg University, Ph.D. Posazhennikov 24 Sergei Prudnik Troika Dialog, Moscow, Analyst 25 Alexander Repkin Institute for Central and East European Studies, Catholic University of Leuven, Special Program 26 Andrei Sarychev MIT, Ph.D. 27 Andrei Shevchenko University of Pennsylvania, Ph.D. 28 Pavel Svadbine Rochester University, Ph.D. 29 Yulia Tsepliaeva Economic Expert Group, the Russian Ministry of Finance, Moscow, Expert 30 Tsinkush Tatyana Investment Company, Head of the Department, Moscow 31 Natalia Turdieva VEDI CEMI, Financial Markets, Editor/ Economic Development of Russia, Moscow 32 Sergei Zaitsev Moscow, Information not available 33 Igor Zhivukhin Coopers and Lybrand, Moscow, Assistant

NES Annual Report 1995/96, Page 33

Academic Placement of Graduates: Class of 96 Once again the graduates of NES have been highly successful in winning fellowships to continue their studies to Ph.D level abroad. This third cohort of graduates to study abroad take up their studies in the following universities in 1996-97 academic year.

University # Australian National University 2 Berkeley 1 Boston U 2 Harvard 1 John Hopkins 1 London Business School 1 MIT 1 Pompeu Fabra, Barcelona 1 New York University 1 Penn State 2 Tilburg 1 Wisconsin-Madison 3 Yale 1

These 18 placements do not, however, tell the real story of the success of NES graduates who applied for admission and fellowships to study abroad. Below are detailed the many multiple offers made to graduates for full fellowships, teaching assistantships, partial funding and admission offers.

Offers 1. Bassov Boston University Accepted Full fellowship 2. Bassov Berkeley Full fellowship 8000 + stipend 3. Bassov Stanford Admission only - Alternate for funding 4. Borisova Berkeley Accepted Full fellowship (Tuition fees plus $9500 pa stipend) 5. Borisova New York University 5 year Last 2 years assistantship last 2 years Stipend: $12000 for 3 years 6. Danilkina MIT Accepted Full fellowship plus additional 3000 on top of usual stipend 7. Deviatov Penn State Accepted Fellowship 8. Deviatov Michigan State Tuition plus Quarter assistantship 9. Deviatov Indiana Admitted but no financial support 10. Deviatov Georgetown Admitted - waitlisted for financial aid 11. Druzhinin Virginia Admitted but no financial support 12. Druzhinin Ohio Accepted M.SC funded by Muskie Fellowship 13. Durnev Penn State Accepted Financial support - tuition, TA ; stipend $9,600 14. Durnev Georgetown Admitted - waitlisted for financial aid 15. Durnev Carlos lll, Spain Full fellowship 16. Ivanov New York University Accepted 5 year Last 2 years assistantship last 2 years Stipend: $12000 for 3 years 17. Kargin Boston U Accepted Teaching assistantship $10,500 first year 18. Kargin Columbia Admitted but no financial support 19. Kargin Michigan Teaching assistantship 20. Kosenok Wisconsin-Madison Accepted Partial university fellowship plus OSI funding

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support 21. Kosenok Pennsylvania Admitted but no financial support 22. Krasnokutskaya Indiana Full fellowship $12,500 + tuition 23. Krasnokutskaya Cornell Admitted but no financial support 24. Krasnokutskaya Wisconsin-Madison Accepted Tuition plus stipend 13,500; TA in second and third years 25. Krasnokutskaya Boston U Admitted; tuition waived; Teaching assistantship $10,500 per year 26. Medvedev Brown Admitted but no financial support but on waiting list 27. Medvedev Duke Admitted -waitlisted for financial support 28. Medvedev Tilburg Four year full fellowship 29. Medvedev Tinbergen Institute Deferred Understanding for 1997 30. Onatsky Harvard Accepted Full fellowship ($15,250 stipend) 31. Onatsky Michigan Teaching assistantship $10,000 32. Onatsky Northwestern 2 year fellowship 33. Onatsky Princeton Full fellowship plus tuition ($10,500 for 5 years plus additional $4000 for assistantship) 34. Onatsky Rochester Full fellowship ($15,000 stipend) 35. Pavlov ANU Accepted Full fellowship $Aus 15000 stipend, travel etc 36. Romanova Carlos 111 Full fellowship 37. Sheidvasser Yale Accepted Full fellowship (stipend 8,500) 38. Sheidvasser Minnesota Assistantship plus stipend (Total $9500 stipend) 39. Sheidvasser Rochester Full fellowship ($8000 stipend) 40. Shestalova Tilburg Accepted 4 year fellowship 41. Shestalova San Diego Admitted -no support for First Year students 42. Sosunov Tilburg 4 year full fellowship 43. Sosunov Columbia Admitted but no funds for first year. 44. Sosunov Australian National Accepted Full fellowship, $AUS 15000, travel, medical insurance University 45. Tchaidze John Hopkins Accepted Tuition waived - OSI stipend $9000 46. Volkov Wisconsin-Madison Accepted With financial support (tuition plus 9000+ stipend) 47. Volkov Duke Full fellowship 48. Volkov Iowa Research Assistantship $1050 per month plus scholarship to cover fees 49. Yezofovitch Maryland Accepted but Full fellowship deferred 50. Yezofovitch New York U Admitted but no financial support

NES Annual Report 1995/96, Page 35

Academic Placements for All Graduates After three graduating classes, NES will have 46 graduates studying in Ph.D programs in USA, Australia and Europe from the beginning of the 1997/8 academic year.

Institution 94/95 95/96 96/97 Total Australian National University 1 2 3 Boston University 1 2 3 Brandeis University 1 1 Brown University 2 2 University of California, Berkeley 1 1 Cambridge University 1 1 Catholic University of Leuven 1 1 Chicago Graduate School of Business 1 2 3 Columbia University 1 1 Duke University 2 2 Harvard University 2 1 1 3 Indiana University, Bloomington 1 1 John Hopkins 1 1 London Business School 1 MIT 1 1 1 3 New York 1 1 Pennsylvania State University 2 2 Pompeu Fabra, Barcelona 1 Rochester University 1 1 Tilburg University, Netherlands 1 1 2 University of Michigan, Ann Arbor 1 1 University of Pennsylvania 2 2 University of Wisconsin-Madison 1 3 4 Western Ontario University 1 1 Yale University 2 1 3 Totals 14 14 18 46

In addition to Ph.D programs, NES Graduates are currently completing or have completed the following M.Sc. Programs and Special Short Term Programs:

Institution # Program Ohio State University 2 M.Sc. University of Toledo 1 M.Sc. Boston University 1 M.Sc. Catholic University of Leuven 2 M.Sc. London School of Economics 4 M.Sc. Tilburg University 1 M.Sc. CentER for Economic Research, 2 Special Program University of Tilburg Institute for Central and E. European 8 Special Program Studies (LICOS), Catholic University of Leuven Institute of Advanced Studies, Vienna 2 Special Program London Business School 1 Special Program

NES Annual Report 1995/96, Page 36

Admissions Class of 1998: Statistical Report The profile of the class of 1998 appears to demonstrate the same calibre of students as for previous intakes. the profile of this incoming class varies little from previous intakes.

Applied % of total Passed the % of total Admitted % of total Exam in English

Total 106 89 51 Average age 23.3 23.7 24.0 Men 72 68% 60 67% 36 71% Women 34 32% 29 33% 15 29% Married 18 17% 18 20% 10 20% Muscovites 36 34% 31 35% 19 37% Non Muscovites (including Moscow region)* 70 66% 58 65% 32 63%

Educational background and degrees: Mathematics 65 61% 57 64% 39 76% Physics 12 11% 11 12% 5 10% Economics 9 8% 6 7% 3 6% Graduates of other institutions 57 54% 46 52% 22 43% Post-graduate students at other institutions 24 23% 22 25% 17 33% Plan to pursue studies at the Ph.D. level 43 41% 35 39% 21 41%

The main institutions students come from: MSU 56 53% 48 54% 34 67% Moscow Physical-Technical University 10 9% 7 8% 3 6% Moscow Physics Institute 5 5% 4 4% 3 6%

Formation of Alumni Association This year saw the first steps in setting up a formalised alumni association. A convening group addressed the International Advisory Meeting setting out their aims and needs. The IAB was enthusiastic about the formation of such a group.

The main directions of the Alumni Club envisioned by the convening group are as follows: 1. To establish and maintain links between the alumni, and between NES and its alumni 2. To contribute to the financial support of research, educational and other activities of NES 3. To arrange meetings with NES students, Club members and possible employers 4. To publish a Club newsletter 5. To compile and operate a database of Club members 6. To organise Club activities 7. To provide advice and other assistance to NES students on employment

Work has already begun on the compilation of a database which will assist in keeping track of all past students and will facilitate communication and cooperation among alumni.

NES Annual Report 1995/96, Page 37

6 FACILITIES

Computer Resources Most computing activity at NES centers on the networked PCs that are located in the computer laboratory and offices of NES. We keep computer equipment updated at a level which allows us to run up-to-date software. Almost all our old 386 computers have been replaced with pentiums through financial support from the Ford Foundation.

The whole computer environment is build around the network and provides easy, fast and reliable communication and sharing of data and software. There are over 35 computers (including those in the Research center) on the network. High-quality laser printers are available for users. NES participates in the IBM Educational Project and thus uses advanced computing technologies available today. To illustrate these technologies we name two of them: OS/2 Warp Server and Lotus Notes. The first is today’s fastest, reliable and most robust network operating system bundled with network management utilities. The second is a standard groupware technology which lets us share information with others immediately no matter how far away they may be. School documents can be stored in a database so people can find what they need quickly. The Lotus Notes project is under development and expected to be available next academic year.

All computers have been outfitted with direct access to the Internet. Both the installation of the network and the Internet connection were accomplished under the guidance, and with the financial support, of the International Affairs Division (IAN) of the International Management Development Institute, University of Pittsburgh. NES was recognized by IAN as one of their most advanced East European partners and received a $10,000 grant to develop its computer and communication resources. The Internet connection was developed in conjunction with CEMI Internet project, which offers a 100Mbps backbone. The capacity of our servers grew tremendously since initial implementation of the IAN project.

NES’s Internet facilities include a comprehensive set of services including e-mail and Worldwide Web servers. NES presents home pages with official information about the school together with various data developed by students. Currently planned future enhancements of the Internet technology include interactive pages to allow two-way communication, and developing the document base related to various research projects being undertaken at NES. We are working on expansion of the environment for increased ease and frequency of communication between NES alumni abroad and NES staff, faculty and students in Moscow and around the country.

The Don Patinkin Memorial Library The Don Patinkin Memorial Library of the New Economic School (NES) was founded concurrently with the School in September, 1992. The library was dedicated to the late Professor Don Patinkin of the Hebrew University in Jerusalem in September, 1995 in recognition of his great contribution to the School as teacher and friend. Professor Patinkin's family has donated his private library to the School. The books are currently being prepared for shipment and will certainly greatly expand and enhance the collection upon their arrival, leaving a lasting legacy for all future students at NES. The library has also received many generous donations from such institutions as the Library of the Bank of Israel, the Hebrew University, the Soros Foundation, as well as from numerous individuals. Library grant In mid 1996, NES was successful in winning a competition for library collection development grants. NES’s successful proposal was prepared by Academic coordinator Daniel Kahn in cooperation the Head Librarian Karine Ter-Akopyan. This grant, funded through HESP, will enable the enhancement of the library’s print and electronic resources.

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Holdings and operation Currently, the library contains approximately 2000 titles and 5000 volumes. The card catalogue is available electronically on the UNIMARC program installed on the School's computer network.

The library is open five days a week from 10 AM to 6 PM. The library reading room is open at all times. The library is run and maintained by Karina Ter-Akopian and her assistant, Tatiana Baranova.

The library is open to all students, faculty and researchers at NES. In addition, NES alumni, academic economists from Russian educational and research institutes, professional economists in the public and private sectors in Russia, and visiting scholars from abroad may obtain access to the library.

Current state of the collection The library's holdings, in keeping with the nature of the New Economic School, are almost exclusively in the discipline of Economics. However, the library also contains reference materials and study aids related to the English Language Instruction Unit at NES. The School is in the process of developing a comprehensive data base for the Russian Federation and other countries in transition. Each of these components of the library's collection is described below.

Textbooks The library distributes textbooks to all students for courses offered at NES. The textbook collection is a central component of the School's ability to provide students with all the materials necessary to study successfully at NES. Over the past four years, NES has accumulated an extensive collection of textbooks for both first year required courses (Introductory and Advanced Microeconomics, Introductory and Advanced Macroeconomics, Probability and Statistics, Econometrics, Game Theory) and second year field courses (e.g. Public Economics, Labor Economics, Growth, International Trade, Industrial Organization). Holdings of textbooks for first year courses typically constitute 60 copies and of second year courses, 25 copies.

Monographs The library contains a modest but growing collection of economics monographs, representing both highly specialized research into specific fields of economic inquiry, classics in the history of economic thought and in the development of the discipline. In addition, the library contains a large collection of monographs on the transition of the formerly centrally planned economies to market based systems. The collection is an indispensable resource for research by both students and by scholars affiliated with the Research Center at NES which is currently undertaking a general research project on Transforming Governments in Economies in Transition.

Reference The library's reference section includes The New Palgrave Dictionary of Economics, The New Palgrave Dictionary of Finance, and general and specialized English-Russian and Russian-English dictionaries. Also available is Econ-Lit, a comprehensive indexed CD-ROM bibliography with selected abstracts of the worldwide literature on economics from over 300 major economics journals as well as from books and collective volumes. In addition, the library contains a collection of the Handbooks in Economics series published by North-Holland. This series provides the various branches of economics with handbooks which are definitive reference sources. Each handbook presents survey articles of the current state of the topic under examination, summarizing the most recent discussions in journals and elucidating new developments. The handbooks are an invaluable resource for becoming acquainted with the main areas of research in any given field and of finding bibliographical references. They represent an excellent starting point for students beginning to develop topics for their Masters theses and are indispensable for their subsequent research.

Journals The library currently subscribes to approximately forty leading economics journals as well as numerous Russian and foreign newspapers and periodicals. The journal subscriptions enable students and scholars to keep abreast of the latest research in economics and is perhaps the most important research component of any library's Economics collection. Gifts from Professors Dudley Wallace, Zvi Griliches, and Michael Bruno have greatly increased the library's journal holdings. For example, the library now has a full run of Econometrica and a run of the American Economic Review dating back to the 1940's. Since many field courses are based on journal articles and since most of the journal

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holdings at NES date back only 3 or 4 years, visiting professors are asked to bring copies of articles that they plan to use in their courses. These articles are then made available to students and are kept on file in the library, thereby supplementing the actual journal collection with seminal articles in various fields of economics.

The NES Journal Subscription for the 1996 Academic Year is as follows: Journal of Economic History Brooking Paper on Economic Activity Journal of Economic Literature Cambridge J. of Economics American Economic Review & Eastern European Economics Journal of Economic Perspectives Econometric Theory Journal of Economic Theory Econometrica Journal of Evolutionary Economics Economic History Review Journal of Finance Economic Journal Journal of Financial Economics Economic Policy Journal of Industrial Economics Economic Theory Journal of International Economics Economica-London Journal of Labor Economics Economic Letters Journal of Mathematical Economics Economics of Planning Journal of Monetary Economics Environment and Planning- Government and Policy Journal of Money , Credit and Banking European Economic Review Journal of Political Economy European Journal of Political Economy Journal of Public Economics Games and Economic Behavior Oxford Economic Papers International Economic Review Public Choice International Journal of Game Theory Quarterly Journal Of Economics International Journal of Industrial Organization Rand Journal of Economics Journal of Applied Econometrics Review of Economics and Statistics Journal of Comparative Economics Scandinavian Journal of Economics

English Language Instruction Materials Before enrolling at NES, students are given a two-week intensive course in English to help them prepare for the English language environment at NES. In their first year of study, students receive up to six hours of weekly instruction in English. These courses are designed to teach students specialized economics terminology, to improve their written and oral presentation skills, and to help students prepare for the TOEFL and GRE exams if they are interested in continuing their studies abroad. Accordingly, the library contains appropriate textbooks, study aids, and tapes for use in the language laboratory. Data In order to facilitate teaching and research at NES, the library maintains a collection of economic data relevant to the study of the transition in Russia and other countries of the former Soviet Union and Eastern Europe. This collection includes both printed and electronic data. The library receives many current publications by the International Monetary Fund (e.g. the Quarterly Directory of Trade Statistics, Annual Economic Reviews, Annual Country Reports, Monthly International Financial Statistics). the World Bank (e.g. Statistical Handbooks, World Development Reports), Goskomstat (e.g. Annual Statistical Handbooks), as well as reports issued by the Government of the Russian Federation, the Institute of Economic Analysis, and RECEP. Other Several steps have been taken during the year to try to improve the working environment for both students and staff. The most important of these improvements has been the renovation of the toilet block. A filtered water dispenser and a coffee machine have been greatly appreciated by all.

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7 GOVERNANCE The year has seen significant progress in the formalisation and refinement of the governance of NES. The main achievements have been the revision of the Charter to bring it in line with new Russian legislation; the formalisation of the academic rules of NES, the formation of the Friends of NES (AFNES) and the establishment of a governance structure for the newly established Research Center.

The primary governing bodies of the school are the International Advisory Board, the Rectorate, and the Academic Committee. The NES Research Center is run through a Research Committee and a Directorate. The International Advisory Board (IAB) The IAB, together with the principal Russian office holders from the Rectorate, is responsible for all major academic, institutional, personnel, and financial decisions.

Its current membership is as follows: • Professor Gur Ofer (Hebrew University) Coordinator • Academician Valery Makarov (Director of CEMI and Rector of NES ) • Professor Michael Bruno (Hebrew University and Vice President and Chief Economist of the World Bank) • Professor Roman Frydman (New York University and the Central European University) • Professor Zvi Griliches (Harvard University) • Professor Sergiu Hart (Hebrew University) • Professor Barry W.Ickes (Pennsylvania State University) • Professor Jan Magnus (London School of Economics and Tilburg University) • Professor Andreu Mas-Colell (University Pompeu Fabra, and Harvard University) • Professor Victor Polterovich (CEMI and NES)

The IAB held its annual meeting in April, 1996. As in earlier years, this meeting including a one-day conference, to which members of the Moscow academic and business communities were invited. (You will find details of the conference program in Appendix A) .

During the meeting reports on the following were made to the Board: 1. The Academic Program (Professor Friedman) 2. The Research Center (Professors Ickes, Polterovich, McAuley) 3. Finances Local sources and fundraising (Academician Makarov) Foreign sources, fundraising and Friends of NES (Gur Ofer) 4. Establishment of Alumni Association (Sergei Prudnik, Alexander Ustinov and Zarema Kasabiyeva) 5. Study Abroad program (Maree Bentley) 6. Employment of graduates (Zarema Kasabiyeva)

A highlight of this year’s meeting was a presentation made to the Board by two graduates seeking to formalise an Alumni Association. The Board welcomed the initiative, regarding it as a welcome sign of maturity of the School, and agreed to support the graduates in their endeavours.

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The Rectorate The Rector of NES is Academician Valery Makarov, who works in cooperation with an International Advisory Board and heads up the Rectorate which manages the day to day operations of the School

The following constituted the Rectorate in 1995/96

Rector Academician Valery Makarov Vice Rector Professor Alexander Friedman School Academic Secretary Valentina Alekseevna Krupina Dean of Students Zarema Kasabieva Academic Coordinator Professor Daniel Kahn Head of the Academic Committee Victor Polterovich School Administrator Oxana Budjko Head of Computer Dept Sergei Makarov Head Librarian Karina Ter-Akopian English Teaching Unit Regina Burdonskaya Chief Accountant Tatyana Komarova

During this year, the Charter of NES has been refined and revised under the Rectorate’s direction. This revised Charter brings the School into line with the Law of the Russian Federation on Education, the Civil Code of the Russian Federation, and other legislative and normative acts concerning activities of such institutions. It will assist in the passage of the School to reregistration as a non-government educational institution.

Academic Committee The Academic Committee is formed from IAB members, professors and lecturers, the Dean of Students and representatives of the NES principal officer holders. The composition of the Committee was approved by the Rector on IAB recommendation.

The composition for 1995/96 was as follows:

Professor Victor Polterovich Chair Dr Alla Friedman Secretary Professor Sergei Aivazian Professor Revold Entov Professor Alexander Friedman Professor Sergiu Hart Professor Daniel Kahn Zarema Kasabieva Valentina Krupina Professor Mark Levin Academician Valery Makarov Professor Andreu Mas-Colell Professor Revold Entov Professor Gur Ofer

The chief task of the Academic Committee this year has been the formalisation of the Academic Rules of NES. These rules set out the main characteristics of the academic process and the relations among faculty, staff and students at NES.

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Admissions Committee Academician Valery Makarov Chair Professor Alexander Friedman Vice Chair Zarema Kasabieva Secretary Dr Pavel Katyshev Valentina Krupina Professor Victor Polterovich

This committee has responsibility for all procedures related to the admissions process. and its quality control, The Committee oversees all recruitment matters, admissions examinations, and policy on admissions requirements.

Financial Committees NES has two financial committees: one for the domestic (ruble) budget; the other for the dollar budget which, from this year, operates through Friends of NES (AFNES). It should be noted that, for the last two years, the dollar budget has covered 50% of the operating ruble budget in Moscow.

AFNES is responsible to all donor foundations for the proper management of the budget; and for reporting periodically to them.

Financial Committee Academician Valery Makarov Professor Alexander Friedman Valentina Krupina Oxana Budjko Professor Gur Ofer

For the formation of Friends of NES (AFNES) and the composition of its committees please see the next section: Finances.

Governance of the Research Center The establishment of the Research Center this year has necessitated the setting up of a directorate for its governance. Research at NES is organized under the Research Committee, which oversees the Research Center, the chief program of which is Transforming Government in Economies in Transition (GET). The GET program has one western and one Russian director, both appointed by the Research Committee for a period of one year.

The principal officers are: Academician Valery Makarov Co-Chair of Research Committee Professor Barry W. Ickes Co-Chair of Research Committee Professor Victor Polterovich Co-Director GET Program Professor Alastair McAuley Co-Director GET Program Oxana Budjko Treasurer Professor Zvi Griliches Dr Pavel Katyshev Professor Gur Ofer

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FINANCES 8 The operations of NES continue to be funded principally through major grants from the Eurasia and Soros Foundations. Another major funder this year is the Ford Foundation which has generously funded the establishment and running costs of the NES Research Center. Support from Russian sources takes the form of provision of rent free premises and a number of funds and grants. For this academic year, as for the last, the dollar budget has funded 50% of the operating ruble budget in Moscow.

Major Funders: Soros, Eurasia and Ford Foundations In 1992, George Soros through the Soros Foundations gave the first grant to set up the School. This support has continued through Open Society Institute of the Soros Foundations (OSI) and its Higher Education Support Project (HESP). The following year, Eurasia Foundation joined in with significant financial support. Both organizations have continued their generous support in subsequent years including 1995/6 to enable the School to consolidate, expand and improve its operations. These two foundations have expressed readiness to join with other foundations to put the School on a firm long- term financial footing.

This year saw the establishment of the NES Research Center made possible by the financial support of the Ford Foundation through a generous three year grant.

NES wishes to register its sincere gratitude to these major funders for their generous and ongoing support without which NES would not have been able to continue to operate. NES is presently preparing a strategic development and business plan for the next five years. We trust that OSI, Eurasia and the Ford Foundations will continue to support NES and help us bring other foundations on board.

Russian financing sources The following lists the various forms of financial support and income derived locally. • CEMI (according to the founder’s agreement) provides premises free of charge. • Moscow State University (according to the founder’s agreement) provides dormitories for NES students at a special discount rate. • Fund for support of mathematical and experimental economics, according to an agreement on cooperation • Joint stock company “Almazy Rosii - Sakha” according to an agreement on cooperation • Russian Humanitarian Science Foundation and Russian Ministry of Science and Technical Policy grants • English and math preparatory course fees and individual donations mainly from NES graduates

NES Staff have developed a program of cooperation with governmental structures, banks, corporations and businesses with one of the aims being to attract financial support. Implementation of this program has partially begun in 1996.

Formation of Friends of NES Towards the end of this academic year, Friends of NES (AFNES), a tax-exempt, non-profit corporation was established in the USA. AFNES is the conduit for NES's activities outside of Russia. The main purpose of AFNES is to serve as a fund raising and public relations organization in support of the New Economic School.

AFNES is the springboard of NES's efforts to raise funds in the west. Through AFNES, efforts are currently being made to gain significant support from private foundations in the United States. AFNES is also currently involved in fundraising efforts with the European Union, through its TACIS (and ACE) programs.

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AFNES Board of Directors Zvi Griliches of Harvard University (President) Roman Frydman of New York University and the CEU (Secretary) Barry W. Ickes of the Pennsylvania State University (Treasurer) Herbert Levine of the University of Pennsylvania Gur Ofer of Hebrew University.

AFNES Financial Committee Professor Barry Ickes, Pennsylvania State University Professor Gur Ofer, Hebrew University Oxana Budjko, New Economic School

PUBLICATIONS AND 9 INFORMATION DISSEMINATION

Prospectus This year saw the production of NES’s first ever Prospectus. This publication is printed in both Russian and English and has the following sections: Overview, Academic Program, Faculty, Research at NES, Students, Facilities, Admission Requirements, Administration and Governance and School Contact Details. This Prospectus will meet the School’s pressing need for ready-to-disseminate information about NES. The Prospectus is available by contacting Oxana Budjko or Maree Bentley. (See contact details at the end of this report.) Use of Internet A NES Home Page has been maintained on the Internet and a GET Home Page is in the process of being established. The Prospectus is also now available on Internet. With an interactive table of contents, its present format is in English but it is hoped to eventually make it also available in Russian. Our address is http://www.nes.cemi.rssi.ru This gives access to both home pages and the Prospectus, all of which are linked. Other Publications New brochures in both Russian and English were prepared for the 1996/7 enrollment period. These were produced in house very cheaply and were quite effective. A four page introduction to NES has been produced. This introduction allows NES to meet the many electronic inquiries about the School quickly, efficiently and economically.

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APPENDIX A: CONFERENCE SCHEDULES

SECOND GENERATION TRANSITION PROBLEMS

CONFERENCE PROGRAMME April 5, 1996 Central Economic and Mathematical Institute (CEMI) Krasikova St. 32, auditorium 521

10:00 Opening remarks. Brigitte Granville, The Royal Institute of International Affairs, London; The Russian European Center for Economic Policy Research, Moscow; The New Economic School.

10:15 - 11:30 John Eatwell, Cambridge University International trade policy, industrial development and economic growth: What can Russia learn from world experience, negative and positive?)

11:45 - 13:00 D. Mario Nuti, University La Sappenta, Rome; London Business School Macroeconomics after stabilization)

13:00 - 14:30 Judith Shapiro, the University of London; the Russian European Center for Economic Policy Research, Moscow The Economics of Health: Is it just another commodity? Alastair McAuley, University of Essex; the New Economic School On the targeting of social security) 14:30 - 15:30 Lunch, hosted by the European Forum 15:30 - 16:45 Michael Ellman, the University of Amsterdam The economics of corruption: What can Russia learn from international experience in limiting corruption?

17:00 - 18:00 Discussion

18:00 Wine and cheese at the NES

...... CONFERENCE PARTICIPANTS Brigitte Granville, Senior Research Fellow, the Royal Institute of International Affairs, London; Expert, the Russian European Center for Economic Policy. She is the author of The Success of Russian Economic Reforms and publishes the monthly Monetary and Financial Report. Lord John Eatwell, Fellow of Trinity College, Cambridge University; Visiting Professor, the New School for Social Research, New York. He is the Labour Party's Principal Spokesman on Treasury and Economic Affairs in the House of Lords. D. Mario Nuti, Professor of Economic Systems, University La Sappenta, Rome; Professor, London Business School; Economic Adviser to various international organizations, including the European Commission, Brussels (1990-93) and the Polish Government (1994- present) Judith Shapiro, Senior Visiting Research Fellow, University of London; Expert, the Russian-European Center for Economic Policy. She is the author of a number of works on the Soviet and Russian economies and social policy.

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Alastair McAuley, Professor, University of Essex; Visiting Professor, the New Economic School; Co-Director, the Research Center at NES. He has worked as a consultant to the World Bank and the British Government. Michael Ellman, Professor of Economic Systems, Amsterdam University. He has published extensively on economic systems, the Soviet and Russian economies, and transformation questions. He has worked as a consultant for agencies of the UN, EU, and Dutch Government. CENTRAL ECONOMIC AND MATHEMATICAL INSTITUTE, RUSSIAN ACADEMY OF SCIENCES (CEMI) CEMI was founded in 1963 as an expansion of the Laboratory of Economic-Mathematical Methods of the USSR Academy of Sciences under the directorship of Academician V.S. Nemchinov. Over 400 highly qualified economists and mathematicians work at CEMI on problems concerning the social and economic development of Russia. CEMI is one of the few scientific establishments of the FSU that specializes in the development of methodological and instrumental methods of applying mathematical models to economic research. THE EUROPEAN FORUM ON DEMOCRACY AND SOLIDARITY The European Forum on Democracy and Solidarity was founded in 1993 on the initiative of the western European Social Democratic Parties. The aim is to establish a close network of contacts between European parties, organizations, and individuals who share Social Democratic principles and values. The European Forum is an independent Foundation. One of the very first activities launched by the European Forum was to develop a program for the economic transformation and integration of Central and Eastern Europe. THE FORUM ECONOMIC PROGRAMME GROUP The Forum Economic Program Group was established in November, 1993 to study the economic transition and integration of the central and eastern European countries. The Group has conducted a series of six seminars across Europe in Bratislava, Moscow, Prague, Tallinn, Warsaw, and Weimar. The seminars have dealt with the subjects of unemployment and the labour market, trade and European integration, public administration, social dimensions, enterprise behavior, and macroeconomic issues. In 1995 the Group published the results of its work in a book entitled, Transformation and Integration: Shaping the Future of Central and Eastern Europe, co-authored by John Eatwell, Michael Ellman, Mats Karlsson, D. Mario Nuti, and Judith Shapiro. TRANSFORMATION AND INTEGRATION: SHAPING THE FUTURE OF CENTRAL AND EASTERN EUROPE The future prosperity and security of Europe depends upon devising policies which transform the former communist states into socially just and environmentally sustainable market economies. That is the goal of this study, which goes beyond the arid debate over "shock therapy" and "gradualism" and faces up to the question of what is to be done next. The future will best be served by social democratic policies: by fostering the dynamism of markets whilst never presuming that markets are socially efficient; by equality of opportunity, for equality is efficient; by dedication to social justice; by wide participation in decision making; and by identifying economic progress with sustainable development. Economic success demands: efficient public administration, a secure legal environment, financial stability, representative trades unions, and an enterprising structure of corporate governance. These form the institutional bedrock of economic efficiency, typically overlooked by economists of the Right, who pass from an abstract conception of markets direct to specific policies without ever confronting reality in between.

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РОССИЙСКАЯ ЭКОНОМИЧЕСКАЯ ШКОЛА

N E W E C O N O M I C S C H O O L

FOURTH ANNUAL CONFERENCE Friday, 12 April, 1996 Central Economic and Mathematical Institute (CEMI) Krasikova St. 32, auditorium 521

CONFERENCE SCHEDULE

MORNING SESSION 10:00 Gur Ofer, The Hebrew University of Jerusalem Opening remarks 10:00-11:30 Jan Magnus, University of Tilburg and London School of Economics Estimation under model uncertainty (in English) 11:30-12:00 Coffee break 12:00-13:30 Andreu Mas-Colell, Universitat Pompeu Fabra, Barcelona Stability of best reply and gradient system with application to imperfectly competitive models (in English)

13:30-15:00 Break AFTERNOON SESSION 15:00 Valery Makarov, Central Economic and Mathematical Institute, Russian Academy of Sciences Opening remarks 15:00-16:30 Keynote speaker: Alexander Livshits, Economic Advisor to the President of Russia The current economic situation and the presidential elections in Russia (in Russian) 16:30-17:00 Coffee break 17:00-18:00 Barry W. Ickes, The Pennsylvania State University What's happening in the enterprise: research on restructuring in Russia (in English) 18:00-19:00 Reception

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INFORMATION ABOUT THE SPEAKERS Gur Ofer, Professor, the Hebrew University, Jerusalem, NES IAB Coordinator. His recent research has focused on the macroeconomic and social aspects of the economies in transition. Prof. Ofer has written extensively on the Soviet and Israeli economies. Prof. Ofer co-edited a recent volume entitled Trials of Transition: Economic Reform in the Former Communist Block and co-authored The Soviet Household under the Old Regime. Prof. Ofer has been a visiting scholar at the Wilson Center, the RAND Corporation, the Brookings Institution, the Harriman Institute, and the Harvard Russian Research Center and was on the Editorial Board of the Journal of Comparative Economics.

Jan Magnus, Professor, University of Tilburg and London School of Economics, NES IAB member. His research interests include econometric methodology, environmental econometrics, misspecification and unit roots, econometrics of exhaustible resources, and sportometrics. Recent articles have appeared in the Journal of Econometrics, Environmental and Resource Economics, and Computational Statistics. Prof. Magnus served as Associate Editor for Econometric Theory and was co-editor of The Significance of Testing in Econometrics.

Andreu Mas-Colell, Professor, Universitat Pompeu Fabra, Barcelona, NES IAB member. Served as President of the Econometric Society. His research has ranged from abstract general equilibrium theory and the structure of financial markets to pricing policy for public firms. He is the author of The Theory of General Equilibrium: A Differentiable Approach and a co-author of the textbook Microeconomic Theory. Prof. Mas-Colell has served as the editor of the Journal of Mathematical Economics and Econometrica.

Academician Valery Makarov, Central Economic and Mathematical Institute Director, NES Rector, Head of Department of Applied Economic and Mathematics Models of MSU. Recently he has been working on the creation and development of computer models of the Russian economy. Editor of Ekonomika and Matematicheskye Metody. First winner of the Kantorovich Prize for outstanding research in models of economic dynamics.

Alexander Livshits, Professor, Doctor of Economics, Economic Advisor to the President of Russia. Has lectured in Russian leading graduate schools. Author of the textbook Vvedenye v rynochnuyu ekonomiku. One of the initiators and a consistent supporter of market reforms in Russia.

Barry Ickes, Professor, The Pennsylvania State University, co-Chairman of the NES Research Center, NES IAB member. His recent research has included articles on the interenterprise arrears crisis, the ruble zone, and the industrial structure of Russia. Has published in journals such as Voprosy Economiky, the American Economic Review, Post- Soviet Affairs, and the Journal of Comparative Economics. Prof. Ickes has worked as a consultant for the World Bank and the OECD on research related to transition economies.

NES RESEARCH CENTER In the academic year, 1995-96, NES established a Research Center. The main goal is to conduct research in teams of Russian and foreign economists and young scholars with the active participation of NES students who acquire research skills through hands on work on specific research projects.

The central project of the Center is Transforming Government in Economies in Transition. The Center is financed through a generous grant from the Ford Foundation. APPENDIX B: ABSTRACTS OF STUDENTS’ THESES

Mikhail Alexandrovsky Topic: Pricing and Advertising under Vertical Control.

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Supervisor: Pavel Katyshev. Abstract: N retailers sell one good produces by one manufacturers. On the first stage of the two-stage game manufacturer sets up wholesale price and the advertising "subsidy" for retailers. On the second stage retailers set up consumer price and choose advertising effort. Under some circumstances advertising subsidy turns out to be positive.

Dmitry Andrienko Topic: Shares of Banks in the Russian Stock Market. Supervisor: A.B.Pomansky Abstract: Banks are at the heart of any financial system; they provide the kind of services which enable the other industries to keep running, and, therefore, performance of the banking sector may serve as a barometer for the whole economy. This makes a study of the banking sector a very important issue in economics; for example, the crisis of the thirties in US was preceded by the banking crisis which occurred to a great extent due to the wrong government policy. This paper attempts to analyze the Russian banking sector using such an indicator as share prices of banks in the stock market. Since results of the general theory predict close connection between bank’s performance and the price of its shares, this analysis can be effectively employed in the range of other methods for monitoring and regulating the banking sector.

Souren Bassov Topic: Individual Investment in Health, Education and Individual Savings: General Equilibrium Approach. Supervisor: Dov Chernichovsky Abstract: The paper is devoted to the development of the model of equilibrium investment in health care, education and physical capital. It is shown, that under some conditions, equilibrium fails to exist and policy measures to avoid such a situation. In the end of the paper the application of the model developed to the long term growth is discussed.

Sergei Bobyr (Awarded Excellence) Topic: Housing Subsidies in Russia Supervisor: A. McAuley, V.Kosmarsky Abstract: In this paper I consider a number of questions concerned with housing subsidies in Russia. One of the main questions that is raised is the transition from the old housing subsidies per square meter to the new subsidy system. A simple theoretical model for the analysis of impacts of housing subsidies is developed. Results of this model are then compared with simulation on real data. Using the RLMS data I assess the impact of the old housing subsidy system and the new one on income redistribution in society. The result: income inequality was substantially reduced through the old housing subsidies and would be even more reduced through the new housing subsidies.

Galina Borissova (Awarded Distinction) Topic: Russian Foreign Trade: Influence of Real Exchange Rate and Regulations Supervisor: Prof. Victor Polterovich, Prof. Brigitte Granville Abstract: The paper investigates the influence of the increase in the real value of Russian Ruble and of the easing of export regulations on Russian foreign trade. The finding is that in Russia during the period of transition (1992-1995) official export and import did not depend on real exchange rate dynamics. However, the indirect estimation shows that unofficial (illegal) import depends on changes in the real exchange rate as predicted by market theory. The independence of export from real exchange rate can be explained by different reasons such as inertia of different nature, interenterprise arrears, trade policy. The general equilibrium type model of open transitional economy shows that the increase in export quotas can lead to the decrease in import- competing industry production, to decrease in private consumption of domestic goods and to the increase in the level of inflation in competitive case.

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Oleg Darg Topic: Some Aspects of Companies’ Behavior in a Market Economy and their Implications in Growth Theory. Abstract: Generally there are three major players (economic agents), that define endogenous behavior of an economy as a whole and the changes of different economic indicators. These are Government, owners of capital, and householders. So if it is known how these economic agents act coming across with a given economic environment and different exogenous shocks, we can predict the future movements of economy and some chosen indicators. Thus, each model, which tries to explain some economic event and predict consequences of it, has to consist of a description of economic environment and objectives of chosen economic agents, which define their behavior.

Alexei Deviatov. (Awarded Distinction) Topic Inflation and Output in Russia: Is there a Link? Supervisor: Brigitte Granville. Abstract: It has been recently found that high inflations are negatively correlated with economic growth in the absolute majority of sample countries. Russia in not an exception to this rule. This study provides an explanation to the observed pattern. We argue that high inflation affects growth through a dramatic reduction in real balances in the economy. Our findings show that the view that money is a significant input in production (of GDP) is supported with Russian data. We find a positive correlation between real money and GDP, though we fail to empirically demonstrate that higher inflation makes money balances decline. Nevertheless, we rely on the conventional rationale that inflation is fraught with a dramatic reduction in real balances and make a final conclusion that inflation, in fact, may be one of the reasons of economic decline during Russian reforms.

Artem Dournev Topic: Pension Reform in Russia. An Economic Analysis of Pension Fund Regulation. Search Model with and without Insurance Supervisor: Barry Ickes Abstract: The possibility of establishing new Pension System in Russia has created interest in a problem regarding the transformation of the existing Pension System. In this study I have attempted to investigate the possible effects of Pension Reform in Russia. Based on international experience, I predicted how the new, Mandatory Saving Defined Contribution Pension System, would operate in Russian economic environment. The main feature of this paper is the theoretical model of Pension Funds regulation. The analysis presented in this model also resolved for main shortcomings of the Barro Gordon approach. The derived result says that Pmin is exactly the value of pension that makes the PFM follow the rule. This is a quite strong result, which implies that without any government intervention there are forces that could bind the PFM and, consequently establish the reputation of PFM. It is very important for workers to feel that PFM operates fairly and this is main prerequisite for deciding whether or not to establish new Pension System.

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Dmitry Druzhinin (Awarded Distinction) Topic: Dynamic Duopolistic Price Competition With Brand Loyalty Supervisor: Michael Baye Abstract: This paper applies Markov Perfect Equilibrium to study dynamic duopolistic price competition under the assumption of brand loyalty. There are two firms and three products. Firms are assumed to sell to brand loyal customers, and as a result the profit function of firm 1 is assumed to be independent of the price of the third good. The Markov strategy reaction functions are found. It is shown that a sales manager, if he wishes to include a new product into the assortment, should choose the product with a low own price elasticity of demand.

Lev Ivanov Topic: The Trend In Real Ruble Appreciation Supervisor: Brigitte Granville Abstract: This paper analyses the trend in the real ruble appreciation in Russia. This analysis is based on the Goskomstat monthly calculations of the Purchasing Power Parity Equilibrium level, dollar wage rate comparison with Poland and Czech Republic and the long-run dynamics in the trade balance of Russia. All the calculations confirm that the Ruble was undervalued in real terms by 20-40% by the beginning of the 1996. The trend of the real exchange rate is tested by three econometric models of time dynamics with linear, exponential and quadratic trends. The last available observations for the end of 1995 - beginning of 1996 show that the current fiscal and monetary policy in Russia keeps the real exchange rate on its long-run quadratic trend which has the best prediction power among the three tested..

Vladislav Karguine Topic: Interregional Integration in Russia Supervisor: Alistair McAuley, Alexey Lavrov Abstract: Questions concerning the changes in the Russian interregional market are investigated. Different reasons for the decline in trade between regions are compared in importance. The relations between the decline in the trade and the decline in total industrial output are discussed. The role of privatization in the trade decline is estimated.

Michail Konkov Topic: Pay-As-You-Go Pension System under Economic and Demographic Transition in Russia. Supervisor: M.E.Dmitriev, Barry W. Ickes Abstract: A forecast of the future financial situation of Russian Pension Fund under the currently existing pension scheme is made. In the process of analysis a conclusion is made about independence of average wage on GDP. Figures show that the pension system cannot exist in the future without government support or other changes. The result may be important for potential pension reform.

Elena Krasnokutskaya Supervisors: Alastair McAuley, Aleksei Lavrov Topic: Structural Changes in the Russian Economy Abstract: Some economists who study the process of transition in Russia claim that initial inequality of Russian regions may have led to different patterns of adjustment to changing economic environment. Possible categorizations of regions into groups with similar tendencies were suggested. In this paper indices reflecting scale and direction of changes in the structure of regional employment were constructed. They show great variety of types of structural changes. Classifications considered in the literature appeared not to be consistent with the types of structural shifts which indices used in this paper may suggest. In the paper possible direction of classification is discussed

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Edgar Lakalin Topic: Inflation and Real Income of Households. Supervisor: V.L.Makarov Abstract: This work consists of three parts. First is dedicated to the comparative analysis of the process of change in inflation and real income in the East Europe and CIS countries. Second part deals with features of the Russian economy and its difference from other countries such as Poland and Ukraine. In third part the formal model of interference between inflation and real income is developed.

Irene Lapidus Topic: The Attractiveness of investments in the Russian Oil-producing Sector. Abstract: Today stocks of Russian companies are considered as both a portfolio investment object and a speculative enrichment instrument. Stock market participants are interested in analysis of investment opportunities so as to be able to choose between long-term, short-term investments or no investments at all. Investment attractiveness of Russian oil-producing firms was estimated by the degree of market misvaluation of companies’ stocks. An empirical model based on the Sharpe — Lintner capital asset pricing theory was developed for this purpose. It can be inferred from the results that most stocks can be used as a hedging instrument. The industry should, in general, be attractive for investments. However, not all stocks are undervalued. Mostly undervalued stocks are those of large firms. Speculative investments are most attractive in this subsector. Nevertheless, it seems problematic to say that the degree of misvaluation depends on companies’ size: correct market valuation may also take place for their stocks.

Alexei Medvedev (Awarded Excellence) Topic: Recession in Russia in the Early Stage of Reforms. Supervisor: V.Polterovich Abstract: This paper considers the problem of recession in Russia during early stage of market oriented reforms (1992-1993) in a single context of integration of its economy into the world market. It contains a theoretical model that is intended to explain the mechanism of the negative effect of increasing availability of export on domestic production. Some empirical observations are provided to support the view.

Vitaliy Natarov Topic: Incentives for spin offs in health insurers' organization Supervisor: Dov Chernichovsky Abstract: This paper models strategic insurers’ incentives to redistribute funds among many care providers. Health services considered as market goods. Care providers compete with each other. In stage one insurer chooses number of Cp’s stroked a bargain is costly to work with many Cp’s, each insurer has a unilateral incentive to do so. Effect of this is reduced profits and increased social welfare.

The case with linear demand and constant marginal cost of management is considered. Important theoretical results achieved is that number of Cp’s chosen by insurers depends mostly on difference between linear demand coefficient and marginal cost, and that socially optimal number of Cp’s choose duopolists

.Alexei Onatski (Awarded Excellence Topic: Efficiency of the Profit Tax Collection in Russia: Regional Aspect Supervisors: A. McAuley, A. Lavrov Abstract: In this work I investigated the efficiency of the profit tax collection in the regions of Russia. I calculated the effective profit tax rates in the regions and found that huge diversity in the efficiency of the tax collection across regions exists. I proposed a hypothesis that the diversity can be explained by the sectoral structure of regional economies. The results obtained showed that the hypothesis has considerable explanatory power. I estimated the effectiveness of the tax collection in different sectors of economy. I found that the greatest efficiency is in the nonindustrial sector

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and such industries as light and construction materials. The least efficiency is in the energy sector. I proposed an explanation of this phenomenon.

Iaroslav Pededri Topic The Influence of Economic and Social Factors on the Formation of Political Preferences Supervisor: Andrew W Warner, HIID, Harvard University Abstract: In this work we attempted to answer the question: Is there a statistically significant relation between economic and social indicators of Russian regions and the results of the Parliamentary elections?

Elena Romanova Topic: Regional QALYs (Quality Adjusted Life Years). The Health Priorities. Supervisor: Dov Chernichovsky Abstract: The objective of this paper is to introduce an indicator that would measure the potential and performance of Russian health system, and will be a convenient tool for priority setting among various health programmes for regions. The method used was calculating QALYs with the help of Rosser classification, as recommended in QALY Toolkit, and further using them as a measure of output in cost-benefit analysis. The main outcome showed that regional QALYs formed from the regional morbidity data. The conclusion is that: the value of QALY results obtained by this method could be used for comparison of health situation in regions of Russia, as well as for cost-benefit analysis for different health programmes.

Sofia Sheidvasser Topic: Regional DALYs and health priorities, Russia. Supervisor: Prof. Dov Chernichovsky Abstract: One of the most fundamental problems facing government when it intervene into health care sphere by financing or providing health services is simply how to make choices about health care. Very often government policy has concentrated on providing as much health care as possible to as many people as possible. It often lead to a very inefficient resource allocation. To reallocate resources correctly and gain as much health as possible for a given amount of resources priorities in the health care should be set on the basis of efficiency assessment of interventions. This priority setting can be done on the basis of cost-effectiveness analysis together with analysis of the size of disease burden. To provide this type of analysis the health indicator reflecting losses of healthy life from both premature mortality and disability is needed. Disability-adjusted life years (DALY) is such an indicator. In this thesis I calculate this indicator for Russia and Russian regions, provide a brief description of the health state in the country and showed some implications of cost-effectiveness analysis for the Russia.

Victoria Shestalova Topic: Savings and Investment in Russia. (GET project: "Recession, stabilization, and industrial policy) Supervisors: B. Granville and V. Polterovich Abstract: The paper focuses on the behavior of savings and investment in Russia. Some empirical relationships about fixed capital investment are presented. No explicit dependence between fixed capital investment and households’ deposits has been found. Two forms of households' savings are considered: deposits and foreign currency. A functional form for deposits of households was suggested and tested using data on deposits of households in commercial banks. In spite of introduction of the exchange rate corridor any essential reallocation in the structure of savings of the population has not been discovered. The fact that the covered interest rate arbitrage condition does not hold in Russia after introduction of the exchange rate corridor has been found.

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Kirill A. Sossounov Topic: Testing the Rational Expectations Hypothesis on the Russian Short-term Treasury Bills Market Supervisor: Andrew M. Warner Abstract: This paper tests the rational expectations hypothesis using data on the Russian Treasury bills. The results are that the rational expectations hypothesis holds both in the sense that forecast errors are uncorrelated over time and that agents’ expectations do not statistically differ from those, which are suggested by the estimated ARIMA model. This result is robust from the point of view that it holds for two different time-period versions of the model. Also, average risk premium of investment, which is buying of the long-term bond and then selling it before the redemption date at the unknown price over investment in the short-term bond and selling it at the face value is estimated.

Robert Tchaidze Jr. Topic: Unemployment Insurance. Russia's Context. Supervisor: Alastair McAuley and Tatiana Maleva Abstract: In this paper current legislation of the Russian Federation is considered. After analyzing briefly the functioning of the Employment Fund, some theoretical models are considered. All of them are based on the two-period version of the Andrew Atkeson and Patrick Kehoe model which was presented in the Research Department Staff Report of the Federal Reserve Bank of Minneapolis named Social Insurance And Transition in 1995. The original version in which social insurance program has been introduced is compared with two other schemes. The result is that speed of transition from the state sector of production into the private one may be increased with usage of a different program.

Eugene Trubach Topic: Alcohol Consumption in Russia. Abstract: By the time of social-political reform the annual mortality increased more than by 1.6 times and reached 15.75 cases in 1000 people in 1994. From 1986 to 1994 this increase constitutes almost 2 million. people. The history of civil states in the 20th century does not know of such intensive decimation of civilians. In this work, alcohol consumption will be considered as one of factors which may explain such an increase in mortality.

Alexey Verbetski Topic: Intergenerational Accounting in Russia Supervisor: Dr. Mickail E. Dmitriev and Prof. Barry W. Ickes Abstract Intergenerational transfers in Russia are studied using current data on demographics and GDP and an estimation for a period from 1997 up to 2081. We compare net payments to the Pension Fund for each generation starting 1976, analyzing differences across generations as well as across scenarios of forecast GDP path and different retirement schemes. The results may be important for potential pension reforms.

Anton Volkov Topic: A model of dividend payment by insurance companies Abstract: Firstly, a problem of finding the optimal dividend payment is studied in this paper. The optimal payment is a payment which maximizes the expected discounted utility of future dividend payments. It is shown that in general the optimal dividend payment cannot be proportional with a coefficient 1 to the funds of insurance company, it can be the case only for linear utility. Also, some properties of the optimal payment are found. Secondly, the paper examines a problem of the optimal investment in insurance companies given the fact that the companies pay out dividends optimally. For this problem an algorithm of finding the optimal investment policy is presented.

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Stanislav Volkov Topic Inflation and Money Demand in Russian Economy Supervisor: Andrew Warner Abstract: In this paper we construct models on demand for real balances and inflation and estimate them using real data for Russian economy for the period from 1992 to 1995. The crucial point of the paper is the evaluation of expected inflation rate for which we present two different patterns. First approach consists in applying adaptive expectations hypothesis while in the second approach rational expectations are assumed.

Yevgeniy Yuzefovich (Awarded Excellence) Topic: Covered Interest Parity in Russia Supervisor Andrew Warner Abstract: The purpose of this paper is to test whether the covered interest parity (CIP) holds in Russian financial markets. The analyzed period lasts form November 1994 to March 1996. It was divided into three main subperiods, which were separated by events that caused structural breaks in the series’ of financial markets indicators. CIP was tested for each subperiod separately, using regression analysis. The finding was that for all the periods CIP is rejected. Nevertheless, the second period seems to be the closest to CIP. In the two other large and persistent deviation from CIP were detected. This implies existence of unexploited profit opportunities and failure of efficient market hypothesis. Possible explanations of failure of CIP are discussed in the paper.

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APPENDIX C: NES DIRECTORY

Contact List Rector Valery Leonidovich Makarov 129-10-11 Coordinator the International Advisory Board Gur Ofer +972-2-883-238 (Israel) Vice-Rector Aleksander A. Friedman 129-13-11 School Academic Secretary Valentina Alekseevna Krupina 332-4249

Deans office 129-39-11, 332 4443 Dean of students Zarema Kasabiyeva Personal Assistant to the Dean Yevgenia Nikolaeva

Head of the Academic Committee Victor Polterovich 332 4606 Member of the Academic Committee Sergei Aivazian 129-1300 Secretary of the Academic Committee Alla Friedman

Resident Academic Coordinator Daniel Kahn 129 3844 School Administrator Oxana Budjko 129-3722, 129-3844 Placement Director Maree Bentley 129-1622, 129 3722 Registrar, Admissions Coordinator Olga Kulagina 332 4423

Computer Dept 332-4423 Head of Dept Sergei Makarov Computer Engineer Anatoly Akinshin

Library Head librarian Karina Ter-Akopian 129-1622 Librarian Assistant Tatyana Baranova

English Teaching Unit 332-4458 Regina Burdonskaya Olesya Marenkina Valeria Salistra

Research Center 129 4611 Co-Chairs of Research committee Valery Makarov Barry W. Ickes 1 (814) 863-2652 (USA) Co-Directors GET Program Victor Polterovich Alastair McAuley Administrator Elena Potapchik Treasurer Oxana Budjko GET computer unit 129 4611 Head Pavel Katyshev 332 4212 Econometrics advisor Anatoly Peresetsky 332 9210 Accountant Tatyana Komarova 332 4240 Cashier Yulia Gurskaya

Address The New Economic School Krasikova 32, Room 1721 Moscow 117418 The Russian Federation

Fax (7095) 1293911; 129 3722 E-mail [email protected]

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